NORWAY – The Petroleum Fund says it has entered a global custody agreement for fixed income instruments with Citibank.
“In the second quarter, an agreement for global custodian services for fixed income instruments was entered into with Citibank NA,” the fund said in its first-half report.
“The securities under internal management are to be kept together there, rather than distributed among several regional custodian institutions, as in the past.” No further details were immediately available.
Knut Kjaer, executive director of Norges Bank Investment Management, which runs the fund on behalf of the Norwegian government, did not return a call seeking comment. Citigroup Global Transaction Services spokesman Robert White was also unable to provide details.
The fund has a fixed income portfolio put at 455 billion crowns (54.6 billion euros) at the end of the second quarter.
The news comes as the fund has disclosed that it made an investment return of 7.7% in the second quarter of this year – beating the benchmark by 0.07 percentage points.
That return is the second highest quarterly return since the fund began investing in equities in 1998, second only to 1999’s fourth quarter, when the return hit eight percent.
“The return on the Government Petroleum Fund in the second quarter of 2003 was 7.7% measured in terms of the currency basket that corresponds to the composition of the Fund’s benchmark portfolio,” the fund said.
The fund has now grown to 775 billion crowns (93 billion euros), from 682.0 billion crowns at the start of the second quarter. The second quarter saw the fund’s market value rise by 93.6 billion crowns, of which 23.1 billion crowns was due to new capital.
“There was a clear rebound in global equity markets, and the return on the equity portfolio was 15.6%,” it added. “The return on the fixed income portfolio was 2.8%.”
In the first half of the year the fund’s return was 5.9%, or 15.3% measured in Norwegian crowns. “The high return in NOK is due to the krone’s depreciation against the currencies in the benchmark portfolio,” the fund said. The annual net return of the fund since January 1997 has been 3.25%.
From the second quarter of 1998 to the second quarter of 2003, the average information ratio for the fund has been 1.01, it added.