Worst return for Norway’s wealth fund in years

The world's biggest sovereign wealth fund, Norway's public pension fund, said Wednesday it posted a 2.7 percent return in 2015 owing to real estate and the global stock market recovery.

Worst return for Norway's wealth fund in years
Yngve Slyngstad and Øystein Olsen presented the fund's 2015 results in Oslo on Wednesday. Photo: Lise Åserud / NTB scanpix
It was however the fund's weakest performance since 2011.
Investments posted returns of 334 billion kroner (€35.6 billion, $39 billion at current exchange rates) last year, boosting the fund's value to 7,475 billion kroner (€796 billion, $874 billion) as of the end of December.
“2015 was a volatile year, with negative interest rates, currency turmoil, falling oil prices and weaker growth expectations for emerging markets,” the head of the fund, Yngve Slyngstad, said in a statement.
“We have seen fluctuations in the fund's return from quarter to quarter, but overall a satisfying result,” he said.
Shares, which account for 61.2 percent of the investment portfolio, yielded a return of 3.8 percent, while real estate, which accounts for 3.1 percent of the portfolio, posted a return of 10 percent. Bonds, representing 35.7 percent, registered a return of 0.3 percent.
At the end of the year, the Norwegian fund, which holds stock in more than 9,000 companies worldwide, owned 1.3 percent of the world's market capitalisation. In Europe, its share was 2.3 percent.
The fund's value varies based on its investment performance and on the amount of oil revenue the Norwegian state deposits, as well as currency fluctuations.
“2016 may mark a shift in the history of the fund,” Øystein Olsen, the governor of Norway's central bank which manages the fund, told reporters.
Because of the drop in oil prices, and the subsequent decline in state oil revenue, the government is, for the first time, expected to withdraw more money from the fund this year than it deposits.
The state is allowed to dip into the fund by up to four percent to balance its budget.
This would be the first time in the fund's 20-year history that the state would not be saving money.
In January, the state withdrew a net 6.7 billion kroner.

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Norway oil fund loses 18 billion euros in first half of 2020

Norway's huge sovereign wealth fund, the world's biggest, lost 188 billion kroner (18 billion euros, $21 billion) in the first half of the year as the global economy reels from the Covid-19 pandemic, the central bank said Tuesday.

Norway oil fund loses 18 billion euros in first half of 2020
Unusually empty slopes and ski lifts in Hemsedal in April. Photo: AFP

The fund, in which the Norwegian state's oil revenues are invested, was hit by plummeting share prices, with stocks accounting for 69.6 percent of its investments.

Its share portfolio posted a negative return of 6.8 percent in the first six months of the year.

At the end of June, the fund was valued at 10.4 trillion kroner (989 billion euros), up from the 9.98 trillion kroner seen at the end of the first quarter.

“The year started with optimism, but the outlook of the equity market quickly turned when the coronavirus started to spread globally,” the fund's deputy chief executive, Trond Grande, said in a statement.

“However, the sharp stock market decline of the first quarter was limited by a massive monetary and financial policy response,” he added.

Real estate investments, which represent 2.8 percent of the portfolio, also posted a negative return, of 1.6 percent, while bond investments, which account for 27.6 percent of assets, posted a gain of 5.1 percent.

“Even though markets recovered well in the second quarter, we are still witnessing considerable uncertainty,” Grande said.

The fund is meanwhile still mired in controversy over the appointment of a new chief executive.

Nicolai Tangen, a billionaire who founded the AKO Capital hedge fund in London, is due to take over the fund on September 1st, replacing Yngve Slyngstad who is retiring.

But critics have complained about Tangen's possible conflicts of interest, as well as his use of tax havens.

The central bank has meanwhile been criticised for irregularities in the recruitment process.

As a result, some major political parties are opposed to Tangen's appointment, and it remains up in the air.

READ ALSO: Norway's oil fund loses 1.3 trillion kroner ($125bn) in coronavirus crash