Norway's Government Pension Fund Global reports flat returns for Q3

Exposure to European equities hindered returns at Norway's Government Pension Fund Global, Oslo, for the quarter ended Sept. 30, while U.S. stocks emerged as the top performer.

Overall, the fund returned 0.1% in the three months ended Sept. 30, according to a financial update. Equities, to which the fund is 61.4% invested, returned -0.5%. Europe, which represented 43.6% of the fund's equity investments at the end of the quarter, was the weakest-performing region, returning -4.3%.

North American stocks, which make up 33% of the equity portfolio, returned 3.4%, while investments in Asia and Australia/New Zealand returned 2.3% and accounted for 7.5% of the equity portfolio. Emerging markets returned 2.1% and accounted for 9.8% of equity investments.

A spokesman for the fund's money manager, Norges Bank Investment Management, said the allocations to European equities are not changing.

The fund has a 37.3% allocation to fixed income, which returned 0.9% for the quarter. Both fixed income and equities allocations underperformed their benchmark indexes by 50 basis points.

The fund is also has 1.3% of its assets invested in real estate, which returned 1.5%.

“Two quarters of strong returns were followed by a virtually flat quarter,” said Yngve Slyngstad, CEO of NBIM. “Increased geopolitical uncertainty in the vicinity of the euro area contributed to a negative return on European stocks. The U.S., on the other hand, emerged as the global growth engine, and U.S. stocks produced a positive return. The negative overall return on equities was canceled out by a positive return on the fund's fixed-income investments.”

Despite a difficult equities backdrop, the fund increased assets by 1% over the quarter, to 5.534 trillion Norwegian kroner ($830 billion), and by 17% compared with assets as of Sept. 30, 2013.