Norway’s $620 billion Government Pension Fund Global, Oslo, saw its assets decline 2.2% last quarter as stocks fell on concern the eurozone’s debt crisis would hamper a global recovery.
The sovereign wealth fund lost 77 billion kroner ($13 billion) on its investments, as measured by a basket of currencies, it said in a statement Friday. Equity investments slipped 4.6%, while the fund’s bonds returned 1.5%.
“A weaker than anticipated development in the world economy weighed on stock markets in the second quarter,” Yngve Slyngstad, CEO of Norges Bank Investment Management, which runs the fund, said in a statement. “There was also increased uncertainty about the repercussions of the European sovereign debt crisis.”
The Norwegian fund is in the midst of a strategy shift to reduce its bond and stock holdings in Europe to capture more global growth as it struggles to meet a 4% return target.
The fund reduced its holdings of bonds issued in European currencies in the quarter to 48.1% of total fixed-income investments from 51%, it said. It also boosted the share of bonds in American currencies to 40.1% and increased the portion of bonds in currencies of Asia and Oceania to 11.6%.
The changes were in line with its strategy to gradually reduce the share of bonds in currencies of developed European nations, it said. The fund in the quarter also increased investments in government bonds in the currencies of emerging economies such as China, Brazil and India, it said.
As of June 30, the fund held 59.6% of its assets in stocks, 40.1% in bonds and 0.3% in real estate. It’s mandated to hold 60% in stocks, 35% in bonds and 5% in real estate.
Norway’s government deposited 72 billion kroner of oil revenue into the fund in the quarter. The fund’s result missed by 0.2 percentage point the benchmark set by the Finance Ministry.
