Folketrydgfondet, which runs the domestic and Nordic investment portion of the Norwegian sovereign wealth fund, said that in the last few months, it carried out its biggest asset rebalancing since the global financial crisis.
Reporting results for this year’s first quarter, the manager of the Government Pension Fund Norway (GPFN) said it had generated a 3.9% overall return, with its total assets under management rising to NOK303.4bn (€30.3bn) from NOK292.2bn at the end of 2020, and shares producing a 7.5% return.
Kjetil Houg, chief executive officer of Folketrydgfondet, said: “After a significant upswing in the stock market, we have sold NOK22.6bn of shares in the Government Pension Fund Norway, to bring the equities allocation back to 60% of the portfolio, as required by our mandate.”
“This is the largest rebalancing we have had since the financial crisis,” he said.
In its interim report, Folketrygdfondet said the upturn in the stock market combined with a low return on bonds in the first quarter had made the exercise challenging.
The bulk of the task, which involved selling equities and transferring the proceeds to the bond portfolio, took place between January and March, according to the report, though the shift had begun last year.
The GPFN’s the first quarter return was 0.2 percentage points lower than the benchmark with equity portfolio underperforming the comparison index by 0.4 percentage points, the manager said.
Fixed income investments, meanwhile, resulted in 1.8% loss in the three-month period, the firm reported, which it said was 0.3 percentage points higher than the benchmark.
The Oslo-based organisation said the GPFN’s average annual return over the last 10 years had been 8.4%, meaning that it had outperformed the market by 0.7 percentage points.
The market value of the Government Bond Fund (GBF), which Folketrydgfondet was tasked with re-starting in March last year to help finance companies struggling with the effects of the pandemic, rose to NOK8.7bn in Q1 2021 from NOK8.4bn at the end of last year, according to the interim data released.
Folketrydgfondet said it had purchased NOK446m of bonds in the period for the GBF.
“Along with the positive development of the market, we have scaled down purchases of the most secure issuers in the Government Bond Fund,” Houg said.