Norway’s Government Pension Fund Norway (GPFN), the smaller domestic counterpart to its giant former oil fund the Government Pension Fund Global (GPFG), reported a 0.4% investment return in the first half of the year, as a 2.7% profit in the second quarter more than erased the 2.2% loss suffered in the first quarter.

Olaug Svarva, chief executive of Folketrygdfondet, which runs the fund, said: “After a challenging start to the year, with low oil prices and falling stock markets, the value of the Government Pension Fund Norway increased in the first half by 0.4% to NOK199.1bn (€21.4bn).”

The GPFN invests 85% of assets in Norway and the rest elsewhere in the Nordic region, with a strategic allocation of 60% equities and 40% bonds.

“We are very pleased to have delivered an excess return of 0.7 of a percentage point during this period, but is also prepared for periods of weaker numbers,” Svarva said.

At the end of the second quarter, the markets had been characterised by Britain’s referendum on withdrawal from the EU, she said, and this had resulted in increased uncertainty and expectations of further monetary and fiscal stimulus internationally. 

“Bond yields fell to new lows, while the stock market has reversed the decline we saw at the beginning of the year,” she said.

Seen on its own, the second quarter return of 2.7% beat the benchmark by 0.3 of a percentage point, Folketrygdfondet said in its interim report.

The equities portfolio returned 3.6% in the second quarter, not quite making up for the 4.8% loss the assets made in the first quarter of the year and ending the first half with a 1.4% loss.

Meanwhile, bonds returned 1.4% in the second quarter, after a 1.6% return in January to March 2016, adding up to a 3.0% return for the whole of the first half.

In its report, Folketrygdfondet said the Norwegian stockmarket had risen 4.3% in the second quarter as measured by the Oslo Stock Exchange index, while the benchmark for Nordic equities showed that shares on other Nordic stock markets had fallen 2.0% in the same period.

Norwegian equities’ performance was mixed, with the energy sector showing the strongest sector rise at 13.0% in the three-month period, while the materials sector was the weakest with an 8.3% drop, it sai