NORWAY – The Government Pension Fund – Global returned 11.1% in 2005, 1.10 percentage points above benchmark.

“In 2005, the return on the Government Pension Fund – Global was 11.1% measured in international currency and 14.3% measured in NOK,” Norges Bank Investment Management said.

The return on the equity portfolio was 22.5% while fixed income returned 3.8%.

It said: “During the last three years, the total return on the Fund has been 32.6%, equivalent to approximately NOK 300bn. The high return is mainly attributable to a sharp rise in equity prices.”

The market value of the fund – formerly known as the Petroleum Fund - at the end of 2005 was NOK1.4trn.

NBIM noted that it terminated more mandates than usual due to staff turnover at managers.

It said: “In 2005, the share of mandates that were terminated was higher than usual. This was due to the fact that a number of portfolio managers had terminated their employment with the company in question and that mandates were split up into smaller specialist mandates.”

Approximately 10% of mandates are terminated each year.

During the year the fund awarded several new fixed income mandates during 2005, as previously reported by IPE.

In March, Norges Bank will purchase foreign exchange equivalent to NOK280m per day for the fund.

Last week central bank governor Svein Gjedrem said the fund was approaching the value of one year’s GDP.