GPFG: Strong results in a volatile year
In 2020, the Government Pension Fund Global returned 10.9 percent, or 1,070 billion kroner, in a year characterised by uncertainty and major fluctuations.
The return on the fund’s equity investments was 12.1 percent. Investments in unlisted real estate returned -0.1 percent, whereas the return on the fixed income investments was 7.5 percent. The fund’s overall return was 0.27 percentage points higher than the return on the benchmark index.
“Despite the pandemic having put its mark on 2020, it has been yet another good year for the fund. The fund’s overall return in 2020 was the second highest since 1998 measured in kroner. However, the high return also reminds us that the market value of the fund might vary a lot going forward", says Chair of the Executive Board Øystein Olsen.
The outbreak and spread of the Corona virus at the beginning of the year had major consequences for the markets.
“The market fell sharply in the first quarter, before quickly recovering in the second quarter. The whole year has been characterised by major fluctuations in the market, and big differences between different sectors, says CEO of Norges Bank Investment Management Nicolai Tangen.
On the equity side, US technology companies in particular made a positive contribution to the return.
“Technology companies had the highest return in 2020, with a return of 41.9 percent. This is mainly due to the pandemic resulting in a massive increase in the demand for products for online working, education, trade and entertainment”, Tangen says.
The krone depreciated against several of the main currencies in course of the year. The currency movements contributed to an increase in the fund’s value of 58 billion kroner. In 2020, 298 billion kroner was withdrawn from the fund.
The fund had a value of 10,914 billion kroner as of 31 December 2020, of which 72.8 percent was invested in equities, 2.5 percent in unlisted real estate, and 24.7 percent in fixed income.
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