As the largest sovereign wealth fund worldwide, the Norway’s Government Pension Fund Global boasts a robust portfolio across different sectors within the financial market.
Norway’s Government Pension Fund Global, created in the 1990s to manage surplus revenues from the country’s thriving oil and gas sector, faced significant hurdles in its third quarter financial revenues ending September 2023.
In an announcement on Tuesday, the Norges Bank Investment Management said the fund, which represents the largest sovereign wealth fund worldwide, experienced a significant loss of a 2.1% decrease in revenue during the just concluded quarter.
All asset classes owned by the fund took a hit, resulting in a substantial 374 billion Norwegian kroner (equivalent to $34 billion) loss during the last three months, compared to the positive trend observed in the year’s first half.
Norges Bank CEO Blames Poor Market Sentiment for the Return
Despite the downturn, the fund performed slightly better than its benchmark index, achieving a return of 0.17 percentage points above the index, equivalent to 27 billion kroner.
However, it is crucial to note that the third-quarter results mark the fund’s first quarterly loss in the last year despite its relatively resilient performance.
The poor performance signifies the ongoing turbulence grappling the global financial markets as many industries face financial crises.
Deputy chief executive of Norges Bank Investment Management, Trond Grande, pointed out that the tech, industrial, and consumer discretionary sectors contributed to the negative return. According to him, the overall weaker stock market in the quarter was a key factor in the decline.
“The stock market saw a weaker quarter compared to the two previous quarters. It was particularly the tech, industrial, and consumer discretionary sectors that contributed negatively to the return”, said Grande.
Diversified Portfolios across 70 Countries
As the largest sovereign wealth fund worldwide, Norway’s Government Pension Fund Global boasts a robust portfolio across different sectors within the financial market.
With a diverse portfolio, the fund has invested in over 9,200 companies across 70 countries. Notably, the Government Pension Fund Global observed a 3.3% loss in unlisted real estate and a 2.4% loss in renewable energy infrastructure investments during the third quarter.
According to the report, equities accounted for 70.6% of the fund’s investments by the end of the third quarter, slightly lower than the previous quarter, reflecting the fund’s diversified portfolio strategy.
As of 30 September 2023, the fund’s total value stood at a substantial 14,801 billion kroner. Equities formed the bulk of investments at 70.6%, followed by fixed income at 27.1%, and a smaller allocation of 2.2% in unlisted real estate and 0.1% in unlisted renewable energy infrastructure.
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