Norway’s sovereign wealth fund saw double-digit property returns for the second year running, as investments overall grew by 7.6% and the largest European asset owner continued to gradually rebalance holdings away from the Continent.

At the end of 2014, the Government Pension Fund Global said assets stood at NOK6.4trn (€706bn), up by NOK1.4trn over the course of the year.

However, changes in the value of the kroner accounted for around half of the increase, and investment returns for only NOK544bn, according to the fund’s annual report.

Additionally, on the back of a sharp decline in oil prices over the second half of 2014, the fund was only paid NOK151bn in oil revenue.

The amount of revenue was significantly down compared with 2013’s transfer of NOK241bn and is the least money paid into the fund by the government since 2004, when a payment of NOK138bn accounted for two-thirds of the year’s revenue.

When measured in international currency, Norges Bank Investment Management (NBIM) said the fund returned 7.6% over the course of 2014.

The figure increased dramatically when measured in kroner, with asset returns rising to 24.3%.

Real estate returns, which stood at 10.4% last year, rose to 27.5% when measured in kroner – the fund’s single-best performance measured in either kroner or international currency in five years – while equities returned 7.9%.

The increased kroner volatility came as the fund grew its exposure to emerging markets and their currencies.

Compared with five years ago, the fund’s exposure to European equity and fixed income had fallen from more than 52% of assets to just 37.7%.

The volatility boosted returns in fixed income, which overall stood at 6.9%.

However, its largest single exposure, to US Treasuries, returned 7.3% when measured in international currency, growing to nearly 15% in kroner.

According to the report, the fund increased the number of currencies in which it was invested by three to 47 – adding Ghanaian cedi, Mauritian rupee and Nigerian naira to its currency basket after both Ghana and Mauritius were added to the fund’s universe.

Slovenia, in which NBIM also only began investing in 2014, accounted for the fund’s largest frontier-market holding by the end of the year, worth NOK4.8bn, while investments in Mauritius and Ghana were valued at NOK82m and NOK15m, respectively.

Since the end of 2012, NBIM’s share of investments in Asia grew from 12.9% to 15.5% and exposure to Oceania and the Middle East rose by 0.2 and 0.1 percentage points to 2.3% and 0.3%, respectively.

While NBIM’s holdings in Africa remained steady at 0.7% of total assets since 2012, the fund’s overall value increased by NOK2.6trn over the same period.

The fund also continued to grow its property portfolio, increasing nearly threefold in size to NOK141bn and now accounting for 2.2% of assets, up from 1%.

Yngve Slyngstad, chief executive at NBIM, said: “Never before have we made as many property investments as we did last year, and we will continue to step up these investments in the coming years.”

A large part of the asset growth came from acquisitions in the US, which now accounted for 35% of the property portfolio, up from 18.7%.

The UK also remained an important country, accounting for 28.4%, up by 1.4 percentage points.

The fund transferred ownership of 11 listed real estate holdings from the equity team to the property team over the course of 2014, with the NOK33bn in holdings returning 6%.

Read Yngve Slyngstad’s thoughts on NBIM’s approach to investments in a recent issue of IPE