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Asset Allocation

Equity Investments Fuel 5.9% Q1 Return for Norway’s Sovereign Wealth Fund

The pension giant also excluded two firms for ‘serious violations of individuals’ rights’ in Myanmar.

By Michael Katz



A strong quarter for equities helped fuel a 5.9%, or 893 billion kroner ($83.8 billion) investment return for Norway’s sovereign wealth fund in the year’s first quarter. The performance raised the portfolio’s value to 14.29 trillion kroner, or $1.34 trillion, at the end of March from 12.43 trillion kroner to close 2022.

The Government Pension Fund Global’s asset allocation is 70.1% in equities, 27.3% in fixed income, 2.4% in unlisted real estate and 0.1% in unlisted renewable energy infrastructure. Despite the robust return for the quarter, the pension fund underperformed its benchmark by six basis points.

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The fund’s equity investments returned 7.4% during Q1, and its investments in fixed income returned 2.7%. Meanwhile unlisted renewable energy infrastructure and unlisted real estate lost 3.8% and 1.0%, respectively.

“The equity investments had the most positive contribution to the return in the quarter,” Trond Grande, deputy CEO at Norges Bank Investment Management, which manages the pension fund, said in a release. “The rise of the equity market was to a great extent driven by the technology and consumer discretionary sector.”

The pension fund noted that the krone depreciated against several main currencies during the quarter and that the currency movements contributed to a “considerable increase” in the fund’s value to the tune of 755 billion kroner. The inflow into the fund totaled 217 billion kroner.

The executive board of the pension fund global also announced it has decided to exclude two companies from investment “due to unacceptable risk that the companies contribute to serious violations of individuals’ rights in situations of war or conflict.”

The pension fund’s Council on Ethics recommended that the fund exclude public gas companies Korea Gas Corp., of South Korea, and GAIL Ltd., of India, for allegedly partnering with Myanmar’s state-owned oil company, Myanma Oil and Gas Enterprise. 

The council noted that in February 2021, the armed forces in Myanmar staged a coup d’état, “after which the military has intensified its extremely serious abuses of civilians.”

The council said the companies’ “business partnership with MOGE represents an unacceptable risk of contributing to extremely serious norm abuses in the future.”

Related Stories:

Norway Pension Giant Seeks To Remove ‘Rotten Apples’ From Portfolio

Market Turmoil Sinks Norway’s Pension Giant by $173 Billion in First Half

Norway Asks Sovereign Wealth Fund to Consider Adding Unlisted Equities

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Home > News > Risk > Jobs Slowdown May Finally Be Happening—So Then the Fed Can Back Off
Risk

Jobs Slowdown May Finally Be Happening—So Then the Fed Can Back Off

Vacancies shrink and Friday’s employment report may aid the deceleration narrative.

By Larry Light

How jobs are doing will be key to what the Federal Reserve does next. At the moment, it looks like job increases are slowing, which might lead the Fed to end its tightening campaign.

When Fed policymakers unveil their interest rate decision on Wednesday—not much suspense there, with most expecting another quarter-point boost—investors will mainly be focused on the organization’s future moves. Chair Jerome Powell’s news briefing likely will deal with what the central bank plans to do going forward in its bid to slow the economy and thus inflation.

The investors’ big preoccupations: How much more the central bank will increase rates and when it will stop?

How employment is faring is key to answering those vital questions. The consensus is that the nation’s robust job growth will finally decelerate to the creation of 170,000 new jobs in April, compared with 236,000 in March.

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On Friday, the U.S. Bureau of Labor Statistics will report the April nonfarm results. Of course, Powell will already have made his appearance by then, but anticipation of what the BLS reports indicate surely will play into the Fed’s decisions. If, indeed, job growth comes in at 170,000, that will mark the first time the number has dipped below 200,000 since early 2020, the start of the pandemic.

Another job-related report, issued Tuesday by the BLS, suggested that employment growth is slowing. The Job Openings and Labor Turnover Survey showed that employment openings dropped in March, with vacancies totaling 9.59 million for the month, below February’s 9.97 million.

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