Fifth best year in the Fund’s history
The Government Pension Fund Global returned 9.6 percent, or 264 billion kroner, in 2010, driven by widespread gains in global stock and bond markets.
“In a year marked by the European sovereign debt crisis and fears of an economic slowdown in Europe, the fund posted its fifth-highest result ever,” says Yngve Slyngstad, chief executive officer of Norges Bank Investment Management (NBIM), which manages the fund.
The fund’s equity holdings returned 13.3 percent in 2010, measured in international currency, while fixed-income investments returned 4.1 percent. The overall return was 1.1 percentage points higher than the return on the fund’s benchmark indices.
“Globally, stocks and bonds gained last year, helped by improving company profits, low interest rates and stimulus measures from the European Central Bank, the Bank of Japan and the US Federal Reserve,” Slyngstad says. “The fund also benefitted from its long-term approach, as large equity purchases during the financial crisis in 2008 and in the first half of 2009 yielded solid returns. The value of our fixed-income investments also continued to recover after steep price drops two years earlier.”
The fund’s best-performing stock sector was basic materials, followed by the industrial and consumer goods sectors. The biggest-gaining stock investments, measured in krone returns, were food company Nestlé, Apple and oil producer Royal Dutch Shell. The weakest performers were Banco Santander of Spain, oil company BP and Banco Bilbao Vizcaya Argentaria of Spain.
The fund held shares in 8,496 companies and 8,659 bonds from 1,686 issuers at the end of 2010. Equity investments accounted for 61.5 percent of the fund’s investments, while fixed-income investments made up 38.5 percent.
The first real estate investment was announced on 4 November 2010. The decision to include real estate as an investment area was an extension of the strategy to exploit the fund's long-term investment outlook.
The market value of the fund rose 437 billion kroner to 3,077 billion kroner at the end of the year. Capital inflows from the government amounted to 182 billion kroner in 2010.
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