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Norwegian sovereign fund reports record quarterly return

Norway’s sovereign wealth fund saw its highest-ever quarterly returns, as some European and Asian markets saw double-digit equity returns.

Announcing overall returns of 5.3% in the three months to 30 March, Norges Bank Investment Management (NBIM) chief executive Yngve Slyngstad noted that, after weak returns from European equities late last year, markets rallied.

The results came as oil revenues paid in by the Norwegian government fell further.

After NOK151bn (€16.6bn) in oil revenue was paid in over the course of last year – significantly down from 2013 after oil prices fell – inflows fell further to NOK9bn in the first quarter of 2015, compared with NOK44.7bn for Q1 of 2014.

When measured in Norwegian kroner, the Government Pension Fund Global reported its highest-ever return of NOK401bn, aided by equity returns of 7.5%.

Japanese equities saw the best overall returns, at 14.5%, with Asia and Oceania as a whole returning 11%.

NBIM also singled out German stocks for praise, as companies listed in the country returned 13.2%, well above the 8.5% return from European equities as a whole.

Despite North American stocks only returning 5.3%, the fund noted that shares in Apple contributed the most returns across its equity portfolio, comprising more than 62% of the NOK7trn in assets, with Novartis and Daimler also singled out for their performance.

The three firms were among NBIM’s largest holdings.

Apple was second only to Nestlé, in which the fund held a stake valued at NOK51.5bn, whereas its stake in Novartis was worth slightly less at NOK42.1bn.

Fixed income returned 1.6%, helped largely by the strengthening US dollar and the resulting 6% return.

Euro-denominated fixed income fared less well, with a negative return of 4.1%.

However, when measured in local currency, the euro-denominated holdings saw positive returns of 4.1%.

Property holdings, which continued to grow over the course of the quarter, returned 3.1%, largely boosted by a 8.1% return from listed property.

NBIM also emphasised its increasing focus on responsible investment, noting that it voted on 10 shareholder resolutions on environmental concerns. 

It added: “In Europe, we gave priority to work on the equal treatment of shareholders. In France, we engaged with a number of companies on new rules doubling the voting rights for long-term shareholders.”

The matter of double voting rights is currently being discussed by the European Parliament as the chamber debates the Shareholder Rights Directive, but critics have warned that the proposed system would be flawed.

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