Norway’s Sovereign Wealth Fund Beats Benchmark with 4% Return in Q1

Norway’s $1.34 trillion Government Pension Fund Global (GPFG) returned 4% during the first quarter of 2021, beating its benchmark by 24 basis points (bps) and adding another $44.6 billion to its total asset value.

The robust quarterly return was driven by the fund’s equity investments, which gained 6.6%. Unlisted real estate returned 1.4%, while the fund’s fixed income investments declined 3.2% during the quarter. As of the end of March, 73.1% of the fund was invested in equities, with 24.5% in fixed income investments, and 2.5% in unlisted real estate.

“The rise of the equity market was to a great extent driven by the finance and energy sector,” Trond Grande, deputy CEO at Norges Bank Investment Management (NBIM), said in a statement.

NBIM, which manages the pension giant, said the krone appreciated against several of the main currencies during the quarter and that its currency movements contributed to a 178 billion kroner (US$21.5 billion) decrease in the fund’s value. It also said 83 billion kroner was withdrawn from the fund.

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Over the last 10 years, the fund has earned annualized returns of 8.2%. It has increased 6.4% on an annualized basis since the beginning of 1998.

Earlier this month, NBIM’s executive board released its revised strategy for 2020-2022, which focuses on optimizing processes, technology, and employee development.

NBIM said that as part of its revised strategy it will “encourage further collaboration across units, foster exchange of knowledge, and strengthen our culture across our international offices.” It also said it will put more emphasis on specific, delegated active strategies and less emphasis on allocation or top-down positioning.

“We will reduce our allocation to systematic factors and exposure to segments outside the benchmark index,” the fund said in its strategy plan. “The exceptions are our allocations to real estate, unlisted renewable infrastructure, and emerging market debt.”

NBIM also said it will gradually increase the number of portfolio managers based in Oslo to complement its international investment organization and offer better career mobility. Additionally, it said it will strengthen relationships with educational institutions, offer career opportunities through its talent and summer internship programs, and “work to inspire young people of diverse backgrounds.”