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Sovereign Wealth Funds

Government Pension Fund Global returned 1.8% in international currency terms in Q2

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Government Pension Fund Global, Oslo, returned 1.8% in international currency terms for the second quarter, helping to bolster the sovereign wealth fund's assets to 8.34 trillion Norwegian kroner ($1.02 trillion).

An update Tuesday said the fund's return equated to 167 billion kroner. For the three months ended March 31, the sovereign wealth fund lost 1.5%, or 171 billion kroner, and for the quarter ended June 30, 2017, it gained 2.6% or 202 billion kroner.

In the fund's local currency, the return for the second quarter this year was 2.6%. Assets grew 2.7% for the quarter and 4% for the year ended June 30.

The sovereign wealth fund's 66.8% allocation to equities returned 2.7% in the second quarter, compared with a 2.2% loss for the previous quarter, and a 3.4% gain for the year-earlier quarter.

The update said the strongest return was in North American equities, which gained 7.3% and accounted for 40% of the equity portfolio. U.S. stocks — the sovereign wealth fund's largest single market allocation at 37.8% of the equity exposure — returned 7.3%.

A 30.6% allocation to fixed-income returned zero in the second quarter, compared with a 0.4% loss in the first quarter, and a 1.1% gain for the second quarter of 2017.

A real estate allocation of 2.6% returned 1.9%, compared with a 2.5% return in the quarter ended March 31 and 2.1% in the quarter ended June 30, 2017.

The kroner also depreciated against the U.S. dollar in the quarter, adding 47 billion kroner to the sovereign wealth fund's value.

"North American and European stocks had a positive development in the quarter despite the prospect of increased trade barriers," said Trond Grande, deputy CEO of Norges Bank Investment Management, which manages the fund's assets, in a statement accompanying the update. "This made a positive contribution to the fund's return."