Norway’s smaller domestic-focused sovereign wealth fund returned 3.7% in the first half, beating its benchmark by 0.2 percentage points.

The NOK220.1bn (€23.7bn) Government Pension Fund Norway (GPFN), the smaller domestic counterpart to the Government Pension Fund Global, recorded gains of NOK7.8bn in the first half of 2017, according to the fund’s manager Folketrygdfondet.

The fund – which invests 85% of assets in Norway and the rest elsewhere in the Nordic region – outperformed its benchmark in this period even though in the second quarter its return fell 0.1 percentage points short of the benchmark, the data showed.

Olaug Svarva, chief executive of Folketrygdfondet, said: “We see that fresh growth in the world economy, better earnings in the business sector and optimism on financial markets has raised the value of the portfolio.”

Rising equity markets lifted the fund’s total assets to a record level at the end of June, Svarva added.

In the second half, the return on the equities portfolio was 4.7%, while the bond portfolio generated 2.2%, Folketrygdfondet reported.

The pension fund has a strategic allocation of 60% in equities and 40% in bonds.

The Norwegian equities market – the Oslo All Share index – rose by just 1.1% in the second quarter, according to data from Financial Express.

“The Oslo Stock Exchange was marked by weak development in the energy and materials sectors, while development was positive for retail and consumer goods sectors,” Folketrygdfondet said in its report.

But in other Nordic countries where the fund can invest, there was an overall increase of 9% in equities measured in Norwegian kroner, it said.