Norway's Government Pension Fund Global posts -0.9% return for quarter

Norway's Government Pension Fund Global, Oslo, reported its assets decreased 1.6% to 6.9 trillion Norwegian kroner ($873 billion) over the three months ended June 30 as negative returns on equity and fixed-income investments, as well as a strengthening Norwegian currency, hit the fund.

The fund returned -0.9% in the second quarter of 2015, said a financial update. That compared with a 5.3% return for the three months ended March 31 — the fund's highest ever quarterly return — and 3.3% for the three months ended June 30, 2014.

For the year ended June 30, assets increased 25.9%.

“The return on fixed-income investments was affected by an increase in yields in the fund's main markets,” said Yngve Slyngstad, CEO of Norges Bank Investment Management, the fund's money manager, in a statement accompanying the financial update. “On the equity side, U.S. stocks pulled down the result.”

Equity investments returned -0.2% vs. 7.5% for the previous quarter. The fund was invested 62.8% in equities. The negative return was attributed to a downturn in North American equities, which returned -1.4% over the quarter. European stocks produced a flat return, while Asian stocks returned 1%. Emerging markets equities returned 1.5%.

Fixed income, to which the fund has a 34.5% allocation, returned -2.2%, compared with 1.6% for the previous quarter.

The fund also has a 2.7% allocation to real estate, which returned 2%, compared with 3.1% for the three months ended March 31.

A strengthening of the Norwegian krone against other main currencies in the quarter decreased the fund's value by 53 billion kroner. For the three months ended March 31, a weakened krone had contributed an additional 175 billion Norwegian kroner.