Norway Wealth Fund’s Giant Stock Portfolio Beats Benchmark Index
(Bloomberg) -- Norway’s sovereign wealth fund, which holds the world’s biggest stock portfolio, said it beat its benchmark index in the first quarter as it focuses more on the U.S. market and brings in additional external managers.
Norges Bank Investment Management returned 6.6% on its equity holdings, which made up just over 73% of the total $1.32 trillion portfolio, it said on Wednesday.
“The rise of the equity market was to a great extent driven by the finance and energy sector,” Deputy Chief Executive Officer Trond Grande said in a statement.
CEO Nicolai Tangen, a former hedge-fund manager who’s been running Norway’s sovereign investment vehicle since September, has signaled he’s willing to embrace more active management in an effort to generate higher returns. That’s as he acknowledges that the near-record 10.9% return the fund delivered last year will be difficult to replicate.
Grande underscored the risk of a sudden jolt to market prices. “We need to be prepared for the fact that things can turn, and turn quickly,” he said in an interview, after the results were published.
In total, the fund returned 4%, or 382 billion kroner ($45.7 billion), in the first quarter. The appreciation of the krone, the best-performing G-10 currency this year, shaved 178 billion kroner off its overall value in the quarter. The fund, which is only allowed to invest in non-Norwegian assets, beat its benchmark by 24 basis points. Its stock portfolio also topped the 4.5% increase in the MSCI World index.
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Created in the 1990s to invest Norway’s oil and gas revenues abroad, the fund delved into renewable infrastructure for the first time earlier this year, as it expands the list of asset classes it holds from stocks, bonds and real estate. Norway’s government also wants the fund to shed more than 2,000 companies out of roughly 9,000 as part of a proposal designed to ensure it’s not exposed to climate or social risks, particularly in emerging markets.
The fund lost 3.2% on its fixed-income investments last quarter, and made 1.4% on its real estate holdings.
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