Despite a 1.5% Loss, Norway’s Sovereign Wealth Fund Still Beats Q1 Benchmark

Negative returns triggered by increasing uncertainty as well as volatility in global equities markets.

The international stock selloff may have caused Norway’s trillion dollar Government Pension Fund Global to lose more than $20 billion in the first quarter, but the massive sovereign wealth fund still outperformed its benchmark.

According to the Q1 report from the fund’s manager, Norges Bank Investment Management, returns generating a 1.5% loss of value were brought on by “increased volatility in global stock markets,” the fund said. Inflation had also risen due to increased US wage growth as well as expectations of rapidly rising interest rates, which then brought on fears of increased protectionism.

“The most important expression of the risk in the fund is that the strategic equity share is set to 70%,” Yngve Slyngstad, CEO of Norges Bank, said in a statement. “This means that fluctuations in the fund’s value are predominantly determined by the development in global stock markets.”

The negative returns came from equities and fixed income investments at -2.2% and -0.4%, respectively. Unlisted real estate investments picked up the slack, raking in a positive 2.5% for the fund, which covers the retirement benefits of the entire country.

Despite this hiccup, the fund’s lackluster returns were still 10 basis points higher than its benchmark, leaving the Norwegian pension fund’s value above $1 trillion.

As of March 31, 66.2% of the entities’ portfolio was invested in equities, 2.7% percent in unlisted real estate, and 31.2% in fixed income.

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