NORWAY - Rising fuel prices helped the Norway Pension Fund Global (NPFG) see 11% growth in its oil and gas sector investments, according to figures released as part of the sovereign fund's first quarter 2011 results.

However, overall returns were well below the peak witnessed in those two sectors, with the NOK3.1trn (€393bn) fund returning 2.1% across its entire portfolio.

The sovereign fund's equity mandates outperformed fixed income holdings by four times, returning 2.9%, despite two of its largest holdings - pharmaceutical company Novartis and Nestlé - being singled out as the "weakest" performers by asset manager Norges Bank Investment Management (NBIM).

However, NPFG's worst-performing equity holding was Japan's Tokyo Electric Power Company - also known as Tepco - managers of the Fukushima Daiichi nuclear plant damaged during March's earthquake and subsequent tsunami.

The report noted that Japanese equity returns were weak across the board. It said: "These investments returned -2.8% in the quarter, measured in local currency, led by a drop in the share prices of Tokyo Electric Power Company."

In contrast, the three best-performing companies came from the oil and gas industry, with Exxon leading ahead of BG Group and Russia's Gazprom.

Its fixed income portfolio, accounting for 38.6% of assets, fared less well, posting 0.7%, with NBIM saying that the fund's government bonds returned 0% when measured in international currency.

"Euro-denominated bonds returned -1.1%, measured in local currency, while UK, US and Japanese government debt returned -0.9%, -0.1% and -0.5%, respectively, measured in local currency."

Corporate bonds performed better, as did NPFG's euro-denominated inflation-linked bonds, both returning 1.4%, with US inflation-linked debt returning a slightly higher 2.1%.

The fund nonetheless outperformed its benchmark by 0.3%, with South Korean and Chinese equity outperforming expectations the most.

Yngve Slyngstad, chief executive at NBIM, said: "Better-than-expected earnings at a number of companies, higher oil and gas prices and growth expectations for the global economy helped push European and US share prices higher."