Government Pension Fund Global, Oslo, returned 6.3% in the first quarter of the year, driven by equity investments, but missed its benchmark index return by 0.1 percentage points.
The sovereign wealth fund, managed by Norges Bank Investment Management, said in an update that assets grew to 17.72 trillion Norwegian kroner ($1.63 trillion), equivalent to a 12.4% increase for the three months ended March 31.
The 6.3% investment return was equivalent to a 1.21 trillion kroner gain. The fund gained 7.9% in the fourth quarter of 2023, and returned 5.9% in the first quarter of last year.
Equity investments, which account for 72.1% of the fund’s allocations, gained 9.1%. “Our equity investments had a very strong return in the first quarter, particularly driven by the tech sector,” Trond Grande, deputy CEO at NBIM, said in the update.
The fund’s other allocations made losses. Its 26% exposure to fixed income returned -0.4%, while unlisted real estate — accounting to 1.8% of the fund’s assets — returned -0.5%. The remaining 0.1% of the sovereign wealth fund is invested in unlisted renewable energy infrastructure, which returned -11.4% for the quarter.
The wealth fund’s investment return was 0.1 percentage point lower than the return made by its benchmark index, which is set by the Norwegian Ministry of Finance based on FTSE Group and Bloomberg indexes.
Currency movements added 647 billion kroner to assets, while inflows to the fund from the government totaled 96 billion kroner.
The sovereign wealth fund was told on April 12 by the Norwegian Ministry of Finance that it would not be allowed at this time to invest in private equity. Executives at NBIM had advised the ministry that the fund’s investment universe should be expanded to private equity.
Expanding to private equity “would entail investments that have to be managed in a manner that is substantially different from the current investment management,” a news release said.
The ministry said it wants to gather more information on both financial and nonfinancial aspects of such investments, and intends on creating a new, external expert council to look at the asset class.
“The government does not wish to open for unlisted equities now,” said Trygve Slagsvold Vedum, minister of finance, in the release. “This is an important decision, and we must allow time to consider it carefully. We wish to establish an independent expert council for the GPFG, and with input from this council we will get a better decision basis and broader debate about all aspects of investments in unlisted equities.”
