Norway’s domestic wealth fund takes coronavirus hit in Q1

Government Pension Fund Norway, Oslo, recorded a return of -11.7% in the first quarter as the coronavirus outbreak hit the fund's equity exposure.

The loss recorded by the fund, which is run in-house by Folketrygdfondet, was equivalent to 31.5 billion Norwegian kroner ($3 billion), said a news release.

The fund had 237.3 billion kroner in the three months ended March 31. The equity portfolio recorded a -20.6% return, and the return on fixed income was 2.5%. Comparative return figures for a year earlier were not available.

The assets of the Government Pension Fund Norway — which alongside the 10.3 trillion kroner Government Pension Fund Global, Oslo, is one of the country's two sovereign wealth funds — are invested 60% in equities and 40% in fixed income.

"The Norwegian market felt the effects of the coronavirus situation, sharp depreciation of the Norwegian krone and an unusually severe fall in oil prices, which dropped 66%. This clearly impacted the fund's performance," Kjetil Houg, CEO, said in the release.

Folketrygdfondet added that, in response to the coronavirus pandemic, it was given a new mandate by the country's Ministry of Finance to revive and manage the Government Bond Fund, effective March 27.

The fund's objective is to provide liquidity and access to capital for Norwegian bond issuers in the domestic market, a spokeswoman said.

Under the mandate, Folketrygdfondet will purchase up to 50 billion kroner in bonds with a minimum credit rating of B- or B3.

"We strongly believe that this will contribute to increased liquidity and capital inflows in the Norwegian bond market," Mr. Houg said in the release.

The fund was also used by Norway and managed by Folketrygdfondet in relation to the 2008 to 2009 global financial crisis.