Norway's Government Pension Fund Global, Oslo, returned 2.7% in 2015, bolstering assets 16.2% to 7.475 trillion Norwegian kroner ($854 billion) for the year ended Dec. 31, said the fund's latest annual report on Wednesday.
The return was equivalent to 334 billion Norwegian kroner. In 2014, the fund returned 7.6%, or 544 billion Norwegian kroner.
Equities returned 3.8% for the year vs. 7.9% in 2014. The fund has a 61.2% allocation to equities, slightly down from a 61.3% in 2014.
Fixed-income allocations returned 0.3% in 2015, down from a 6.9% a year previous. Exposure to fixed income was reduced over the year, to 35.7% from 36.5% at Dec. 31, 2014. Real estate exposure increased to 3.1% from 2.2% a year previous. Real estate investments returned 10% in 2015 vs. 10.4% in 2014.
The fund also benefited from a weak currency vs. other main currencies; the value increased by 668 billion Norwegian kroner due to the effects of foreign exchange. In 2014, changes in currency contributed 702 billion Norwegian kroner to the fund.
“2015 was a volatile year, with negative interest rates, currency turmoil, falling oil prices and weaker growth expectations for emerging markets,” said Yvnge Slyngstad, CEO at Norges Bank Investment Management, which manages the assets of the fund, in a statement accompanying the annual report. “We have seen fluctuations in the fund's return from quarter to quarter, but overall a satisfying result.”
In 2015, the fund further diversified its investments by geography. As of Dec. 31, 38.1% of the fund's investments were in Europe, down from 39.3% a year earlier. North America exposure increased to 40% from 38.9%. Asia and Oceania investments increased to 18.1% from 17.5%.
But exposure to emerging markets decreased over the year, to 9.8% of the fund's investments from 10.6% in 2014, "due to a decrease in the value of our investments and to currency effects," said the annual report.
