The Government Pension Fund Norway (GPFN) – the smaller component of the country’s famous sovereign wealth fund – underperformed its larger sibling last year in its rate of return, but triumphed in terms of active management, according to the annual report of its manager.

Figures published on Friday showed Folketrygdfondet, which manages the GPFN, produced an 11.4% return on the fund, the domestic and Nordic investment part of the overall Government Pension Fund, with that return having outpaced the benchmark index by 1.5 percentage points.

At the end of 2023, the GPFN had NOK354bn (€31.3bn) of assets.

By contrast, Government Pension Fund Global (GPFG) ended last year worth NOK15.76trn, its manager Norges Bank Investment Management reported at the end of January, having returned 16.1% on its assets. However, the giant fund’s active management made a loss, with the fund having underperformed its benchmark by -18 basis points.

Kjetil Houg, chief executive officer of Folketrygdfondet, said: “We are delivering the second best result in the fund’s history in 2023, but this must be seen in the context of the fall in value in 2022.”

The GPFN ended 2022 with a 4.4% loss, with those results weighed down particularly by deep bond losses during the year.

“We are satisfied with once again delivering a high excess return in both the share and fixed income portfolio,” Houg said.

The outperformance in 2023 was more heavily attributable to Folketrygdfondet’s bond management than its handling of equities, according to the report – even though the latter asset class produced the higher return.

The return on the fixed interest portfolio generated an 8.15% return, which was 2 percentage points above the benchmark, while equities returned 13.6% – 1.12 points higher than the corresponding index.

Houg said in the report that Folketrygdfondet had grown to the point where it now owned 10% of the main index on the Oslo Stock Exchange.

It is partly concern at this growing dominance of the home market that prompted the Norwegian government to establish a new northern SWF in which to channel some of the country’s vast oil wealth domestically.

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