Fund posts its fifth-largest quarterly return
The Government Pension Fund Global returned 7.2 percent, or 199 billion kroner, in the third quarter, driven by gains in global stock and bond markets. The return was the fifth-largest in the fund’s history.
“A rebound in global stock markets helped the fund’s investments, which gained in all sectors in the third quarter,” says Yngve Slyngstad, chief executive officer of Norges Bank Investment Management (NBIM), which manages the fund.
The fund’s equity investments returned 9.8 percent in the quarter, measured in international currency, while fixed-income investments returned 3.4 percent. The fund’s overall return was 0.4 percentage point higher than the return on its benchmark portfolio.
“Better-than-expected earnings figures from a range of companies and reduced fears of an economic slowdown in Europe contributed to the stock market rally,” Slyngstad says. “Concern over some southern European countries’ sovereign debt also eased somewhat.”
The fund’s best-performing stock sector was basic materials, followed by the oil and gas industry and the telecommunications sector. The best-performing stock investment was oil company BP, followed by Telefonica, a Spanish telecommunications company, and oil company Royal Dutch Shell. The worst performers were Wells Fargo & Co, a U.S. bank, the Swiss pharmaceutical company Roche Holding and Bank of America.
The fund’s investments were split 60.4 percent in equities and 39.6 percent in fixed-income securities at the end of the quarter.
The market value of the fund rose 116 billion kroner to 2,908 billion kroner, helped by a third-quarter return of 199 billion kroner and 49 billion kroner in capital inflows from the government. An increase in the krone exchange rate reduced the market value by 132 billion kroner.
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