Norway’s sovereign wealth fund returned 59 billion kroner ($11 billion) in the first three months of 2011, the smallest gain since last year’s second quarter, as European bonds slumped.
The $573 billion Government Pension Fund Global returned 2.1 percent, as measured by a basket of currencies, the Oslo- based investor said today. The equity portfolio returned 2.9 percent and fixed-income investments climbed 0.7 percent, led by gains in covered bonds. European bonds fell 1.1 percent.
Government bonds in Europe suffered amid concerns the region won’t solve its debt crisis while U.S. debt prices were little changed as central bank purchases offset concerns about the government’s deficit. Stocks rose, with the MSCI World (MXWO) Index reaching a 30-month high in February on optimism accelerating global growth will fuel corporate profits.
“Better-than-expected earnings at a number of companies, higher oil and gas prices and growth expectations for the global economy helped push European and U.S. share prices higher,” said Yngve Slyngstad, chief executive officer of Norges Bank Investment Management.
The fund, which gets its guidelines from the government and is part of Norway’s central bank, held 61.3 percent in stocks, 38.6 percent in bonds and 0.1 percent in real estate at the end of the quarter. It’s mandated to hold 60 percent in stocks, 35 percent in bonds and 5 percent in real estate. The fund completed its first real estate purchase this year, buying 25 percent in the U.K. Crown Estate’s Regent Street properties.
Biggest Gainers
The fund said its biggest gainers in the period were Exxon Mobil Corp., BG Group Plc and OAO Gazprom. The fund lost 2.8 percent in the quarter on its Japanese stock holdings, which constituted about 5 percent of the fund, as stocks plunged following the earth quake and tsunami.
The largest stock holding at the end of the quarter was in Royal Dutch Shell Plc, followed by HSBC Holdings Plc and Nestle SA. The largest fixed-income holdings were in U.S. Treasuries, followed by U.K. and Italian government bonds. Spanish government debt was the fund’s eighth largest holding.
Slyngstad at briefing today that the investor cut its holdings in Greek government bonds by about 500 million kroner in the quarter to 4.3 billion kroner as debt came due.
“Uncertainty about the fiscal situation in some European countries and expectations of interest rate increases from the European Central Bank and the Bank of England pushed up yields and lowered prices on European government bonds,” the fund said.
Currency Split
The fund had 82 percent of its investments in euros, pounds, dollars and yen at the end of the quarter, the report shows. A stronger krone against several currencies the fund invests in reduced the market value by 73 billion kroner.
The fund got its first capital infusion in 1996 and has been taking on more risk as it expands globally, increasing its stock portfolio from 40 percent in 2007. It first added stocks in 1998, emerging markets in 2000 and this year real estate to boost returns and safeguard wealth.
Norway, a nation of 4.9 million people, generates money for the fund from taxes on oil and gas, ownership of petroleum fields and dividends from its 67 percent stake in Statoil ASA (STL), the country’s largest energy company. Norway is the world’s second-largest gas exporter and the seventh-biggest oil exporter. The fund invests outside Norway to avoid stoking domestic inflation.
Capital Inflow
The government deposited 38 billion kroner of petroleum revenue into the fund in the first three months of 2011. The return exceeded by 0.3 percentage point the benchmark set by the Finance Ministry.
Only Abu Dhabi has a larger wealth fund, according to the Sovereign Wealth Fund Institute in California. A sovereign wealth fund is a state-owned fund with assets such as stocks, bonds and real estate.
The International Monetary Fund predicts growth in the world economy will accelerate to 4.5 percent in 2012 from 4.4 percent this year. While advanced economies will expand 2.4 percent this year, developing nations will grow 6.5 percent, driven by expansions in China and India, the IMF predicts.
Source: www.bloomberg.com
The $573 billion Government Pension Fund Global returned 2.1 percent, as measured by a basket of currencies, the Oslo- based investor said today. The equity portfolio returned 2.9 percent and fixed-income investments climbed 0.7 percent, led by gains in covered bonds. European bonds fell 1.1 percent.
Government bonds in Europe suffered amid concerns the region won’t solve its debt crisis while U.S. debt prices were little changed as central bank purchases offset concerns about the government’s deficit. Stocks rose, with the MSCI World (MXWO) Index reaching a 30-month high in February on optimism accelerating global growth will fuel corporate profits.
“Better-than-expected earnings at a number of companies, higher oil and gas prices and growth expectations for the global economy helped push European and U.S. share prices higher,” said Yngve Slyngstad, chief executive officer of Norges Bank Investment Management.
The fund, which gets its guidelines from the government and is part of Norway’s central bank, held 61.3 percent in stocks, 38.6 percent in bonds and 0.1 percent in real estate at the end of the quarter. It’s mandated to hold 60 percent in stocks, 35 percent in bonds and 5 percent in real estate. The fund completed its first real estate purchase this year, buying 25 percent in the U.K. Crown Estate’s Regent Street properties.
Biggest Gainers
The fund said its biggest gainers in the period were Exxon Mobil Corp., BG Group Plc and OAO Gazprom. The fund lost 2.8 percent in the quarter on its Japanese stock holdings, which constituted about 5 percent of the fund, as stocks plunged following the earth quake and tsunami.
The largest stock holding at the end of the quarter was in Royal Dutch Shell Plc, followed by HSBC Holdings Plc and Nestle SA. The largest fixed-income holdings were in U.S. Treasuries, followed by U.K. and Italian government bonds. Spanish government debt was the fund’s eighth largest holding.
Slyngstad at briefing today that the investor cut its holdings in Greek government bonds by about 500 million kroner in the quarter to 4.3 billion kroner as debt came due.
“Uncertainty about the fiscal situation in some European countries and expectations of interest rate increases from the European Central Bank and the Bank of England pushed up yields and lowered prices on European government bonds,” the fund said.
Currency Split
The fund had 82 percent of its investments in euros, pounds, dollars and yen at the end of the quarter, the report shows. A stronger krone against several currencies the fund invests in reduced the market value by 73 billion kroner.
The fund got its first capital infusion in 1996 and has been taking on more risk as it expands globally, increasing its stock portfolio from 40 percent in 2007. It first added stocks in 1998, emerging markets in 2000 and this year real estate to boost returns and safeguard wealth.
Norway, a nation of 4.9 million people, generates money for the fund from taxes on oil and gas, ownership of petroleum fields and dividends from its 67 percent stake in Statoil ASA (STL), the country’s largest energy company. Norway is the world’s second-largest gas exporter and the seventh-biggest oil exporter. The fund invests outside Norway to avoid stoking domestic inflation.
Capital Inflow
The government deposited 38 billion kroner of petroleum revenue into the fund in the first three months of 2011. The return exceeded by 0.3 percentage point the benchmark set by the Finance Ministry.
Only Abu Dhabi has a larger wealth fund, according to the Sovereign Wealth Fund Institute in California. A sovereign wealth fund is a state-owned fund with assets such as stocks, bonds and real estate.
The International Monetary Fund predicts growth in the world economy will accelerate to 4.5 percent in 2012 from 4.4 percent this year. While advanced economies will expand 2.4 percent this year, developing nations will grow 6.5 percent, driven by expansions in China and India, the IMF predicts.
Source: www.bloomberg.com
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