The Government Pension Fund Global: Equity purchases in a weak market
The Government Pension Fund Global returned -6.1 percent, or -485 billion kroner, in 2018.
The fund’s market value fluctuated widely in 2018, a year dominated by volatile markets. There was a positive return in the second and third quarters, but a weak equity market in the first and fourth quarters reduced the fund’s overall results.
“Although performance was weak in 2018, the long-term return has been good and higher than the return on the benchmark index,” says Øystein Olsen, Chair of the Executive Board of Norges Bank.
Equity investments returned -9.5 percent, unlisted real estate investments 7.5 percent, and fixed-income investments 0.6 percent. The overall return on the fund was 0.3 percentage point lower than the return on the benchmark index.
The fund’s average share of the world’s listed companies increased during the year as a result of net equity purchases in fourth quarter 2018. These purchases corresponded to 2.2 percent of the fund’s market value at year-end.
“The fund net bought equities for 185 billion in fourth quarter 2018. Most of this was bought in November and December.” says Yngve Slyngstad, CEO of Norges Bank Investment Management.
The strategic allocation to equities in the benchmark index was increased to 70 percent in 2017. The fund had a market value of 8,256 billion kroner at 31 December 2018, of which 66.3 percent was invested in equities, 3.0 percent in unlisted real estate and 30.7 percent in fixed income.
The krone weakened against several of the main currencies during the year, which increased the fund's value by 224 billion kroner. In June, for the first time since 2015, the fund had an inflow of capital from the Ministry of Finance. The total inflow for the year was 33.8 billion kroner.
Thomas Sevang, Head of Communications and External Relations
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Marthe Skaar, Manager of Communications and External Relations
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