Norway’s Government Pension Fund Global increased its investments in small-capitalization companies in debt-burdened European countries such as Italy and Greece during the past 18 months, the head of the $544 billion fund said.
“We think it’s structurally possible to make money” in these markets, Yngve Slyngstad, CEO of Norges Bank Investment Management, which handles the assets of the Oslo-based fund, said in a speech Tuesday. The fund also handed out external investment mandates targeting small-cap stocks in France and Spain, he said.
The fund, Europe’s largest equity investor, this month reported its smallest quarterly gain in a year, returning 0.3% as its stocks fell 0.7% in the second quarter. The fund, which reduced its bond holding to the peripheral eurozone members during the three months through June, might also struggle in the third quarter after a global stock market rout slashed the value of global equities by about $5.7 trillion in August.
The MSCI Italy Small Cap index has lost 12% this year, compared with a 24% loss for the benchmark FTSE MIB index. The MSCI Greece Small Cap index has plunged 35% this year, the same as the decline for the benchmark ASE index.