The Government Pension Fund Global, Oslo, returned 3.2% in the three months ended Sept. 30 in international currency terms, bolstered by strong equity returns.
An update by the fund said assets were 7.95 trillion Norwegian kronor ($998.9 billion) as of Sept. 30, down 0.85% from June 30. Assets grew 11.72% for the 12 months.
The quarterly return was equivalent to a 192 billion kronor gain. For the second quarter, the fund returned 2.6% or 202 billion kronor; and for the three months ended Sept. 30, 2016, the fund achieved a 4% return, equivalent to 240 billion kronor.
The fund invests in international securities. Returns are generally measured in international currency, a weighted combination of currencies in the fund's benchmark indexes for equities and bonds. The currency basket consisted of 34 currencies as of Sept. 30.
However, in local currency terms the fund had a 0.71% loss for the three months ended Sept. 30, compared with a 2.15% return for the second quarter. For the third quarter 2016, the fund made a 0.41% loss in kronor terms.
The fund's equity investments gained 4.3% in international currency terms, and gained 0.4% in kronor terms. The fund's equity allocation was 65.9%.
The strongest contributor to equity returns came from emerging markets, said the update, gaining 6.4% in the third quarter and accounting for 10.2% of the equity portfolio. China's stock market returned 10.4% and accounted for 3.2% of the fund's equity investments.
Fixed income gained 0.8%, but lost 2.93% in kronor terms. The allocation was 31.6%.
Unlisted real estate accounted for the remaining 2.5% of the fund portfolio, returning 2.7% in international currency. In kronor terms the allocation lost 1.16%.
"We have had positive results in all asset classes so far this year, and especially the return on our equity investments has been very good," said Yngve Slyngstad, CEO of Norges Bank Investment Management – which runs the fund's assets – in the update. "In this quarter, the return on equity investments was driven by economic growth globally and good results from the companies."
Mr. Slyngstad warned the fund "must be prepared for volatile stock markets, and can not expect such a return every quarter."
The kronor appreciated against main currencies in the quarter, decreasing the value of the fund by 250 billion kronor, added the update.
