Record-high return in third quarter
The return on the Government Pension Fund – Global was 13.5 percent (NOK 325 billion) in the third quarter. The record-high quarterly return can be attributed to a sharp rise in international equity markets and a normalisation of fixed income markets.
–The strong upturn in markets in the second quarter continued in the third quarter, leading to a return of 529 billion kroner so far this year, says Yngve Slyngstad, CEO of Norges Bank Investment Management (NBIM).
The return on the fund’s equity portfolio was 17.7 percent in the third quarter, while fixed income investments gained 7.2 percent.
– The liquidity in fixed income markets was abnormally low at the start of 2009, but has improved. This has led to an upturn in prices and more normal levels in the third quarter. We expect this development to be more limited going forward, says Slyngstad.
The fund’s third-quarter return was 1.5 percentage points higher than the return on the benchmark portfolio. Fixed income investments had an excess return of 3.3 percentage points compared with the benchmark, while equity investments had an excess return of 0.2 percentage point.
The fund’s total return exceeded the benchmark portfolio by 3.4 percentage points in the first nine months of the year. The return lagged the benchmark portfolio by 3.4 percentage points in 2008.
The value of the fund rose by NOK 163 billion to NOK 2 549 billion in the third quarter, helped by inflows of NOK 49 billion. This was on a level with capital transfers in the previous two quarters but significantly lower than in 2008. A strong krone reduced the fund’s value by NOK 211 billion. Krone fluctuations have no impact on the fund’s international purchasing power.
The strong rise in international equity markets helped increase the fund’s share of equity investments to 62 percent at the end of the third quarter.
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