Government pension fund - Norway drops €3bn
NORWAY - The Government Pension Fund - Norway lost NOK29.6bn (€2.95bn) in 2008 according to the latest figures from Folketrygdfondet.
The asset manager, which is a state-owned company solely responsible for the domestic pension fund which only invests in Norway and other Nordic countries, confirmed in the annual report for 2008 that the value of the scheme had dropped from around NOK113bn in 2007 to NOK 87.8bn at the end of last year.
The overall return on the pension fund was -25.1% as its portfolio has a target allocation of 60% in equities, although at the end of 2008 equity investments consisted of 44.5% in Norwegian shares and 8.5% in shares from Denmark, Finland and Sweden, while the remainder was invested in fixed income with 38.8% in Norwegian assets and the final 8.2% in the other Nordic countries.
Folketrygdfondet revealed fixed income investments produced a positive return, with the Norwegian portfolio yielding 8.48% and the fixed income assets in the other Nordic countries returning 23.49%.
That said, while the active return on the total portfolio was 3.7% higher than the benchmark return, the poor performance of the equity holdings offset the gains from the fixed income as the Norwegian equity investments returned -49.2%, while the Nordic securities portfolio yielded -32.8%.
Olaug Svarva, managing director of the asset manager, said: "In a historically turbulent and challenging year in the equity and fixed income markets, we can determine that Folketrygdfondet, through reasonable management, has contributed to a result that is NOK4.3bn higher than the benchmark."
As the firm highlighted, the Norwegian equity portfolio outperformed the benchmark by 4.9 percentage points and the Nordic securities achieved a return 4.72 percentage points higher than the -37.47% by the reference portfolio.
In addition, the Norwegian fixed income assets also outperformed to deliver an active return of 0.64 percentage points against the benchmark return of 7.84%,but the fixed income portfolio from Denmark, Finland and Sweden was the only sector to underperform the benchmark return of 24.62% by 1.13 percentage points.
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