Norway’s sovereign wealth fund has seen volatile equity markets lead to a NOK273bn (€28.5bn) quarterly loss, its second consecutive month of investment losses.

The Government Pension Fund Global’s (GPFG) -4.9% return was its third-weakest since inception, with Norges Bank Investment Management (NBIM) chief executive Yngve Slyngstad blaming the slowdown in the global economy and the decline in global equity markets.

Slyngstad specifically singled out the Chinese equity market but sought to emphasise the long-term nature of the NOK7trn fund and its ability to “ride out” short-term market changes.

“We have to expect fluctuations in the value of the fund when there are large movements in the market,” he said. “With the fund as big as it is today, this can have a considerable impact in the short term.”

Despite the -8.6% return from its equity portfolio, accounting for close to 60% of assets, the GPFG had only seen its year-to-date return slip to 0.79%, aided in part by a 3% return from its property holdings – now comprising 3% of assets – and a 0.9% return from its fixed income holdings.

When measured in kroner, property was the best-performing asset class with a year-to-date performance of 18.5%, ahead of the 9.8% return from fixed income and the 7.5% return on equity – achieved despite two negative quarters of returns.

Breaking down equity returns, NBIM said Asia and Oceania had seen the worst results, returning -12.9% and accounting for a fifth of the equity portfolio.

China, which accounted for almost 3% of the equity portfolio, lost 21.3% of its value over the quarter.

The manager said concerns over Chinese growth saw its exposure to emerging markets, around 9% of equities, return -16.6%, while commodity price weaknesses saw the basic materials sector return 16.9%, the worst-performing sector of all.

Measured in international currency, not a single of the fund’s 10 equity sectors – encompassing financials, oil and gas and utilities – saw a positive return, with the latter the best performer at -2.9%.

“These companies’ stable cash flows were viewed as a safe haven in a turbulent market,” NBIM noted in its quarterly report. “The sector was also favoured by low interest rates.”

Across the fixed income portfolio, only government-related bonds saw a loss, and corporate bonds – accounting for one-fifth of fixed income – were the strongest holdings, returning 1.5%.