Norway’s Massive Pension Fund Returns 19.9 Percent

The fund’s gains were driven by equities, its annual report showed.

Norway’s government pension fund had a banner year in 2019, returning a whopping 19.9 percent.

The Government Pension Fund Global announced its annual returns on Thursday, noting that 2019 was a record year in terms of returns measured in Norwegian krone. The pension fund, which managed a total of 10.09 trillion kroner (USD$1.1 trillion) through the end of 2019, said it returned 1.69 trillion kroner for the year, according to an announcement.

“2019 has been a great year in the fund’s history, driven by positive equity returns in all of the fund’s principal markets and in all equity sectors,” said Yngve Slyngstad, CEO of Norges Bank Investment Management, the bank that manages the fund.

According to the pension fund, the percentage-point return for the year was its second-best since 1998. This amounts to a turnaround for the fund, which lost 485 billion kroner in 2018, a 6.12 percent loss for the year.

For 2019, the pension fund’s equities allocation returned 26 percent, driving the year’s returns, according to the annual report. This is compared with a 9.49 percent loss on equities in 2018. As of December 31, 2019, 70.8 percent of the fund’s assets were invested in equities, according to the pension fund’s announcement.

The pension fund announced in March 2019 that it would divest from oil and gas production and exploration companies, a move it had been considering since 2017.

But for 2019, 5 percent of the fund’s assets remained allocated to oil and gas equities investments, the annual report showed. It was a small decline from 2018’s 5.9 percent. This allocation returned 12.9 percent for the year, which the report said was the “weakest” performing equities sector for the year.

Royal Dutch Shell, a British-Dutch company that, among other things, extracts crude oil and natural gas, is in the fund’s top ten equity and bond holdings, the annual report shows.

The pension fund’s capital originated from proceeds from domestic oil drilling, which the government has engaged in since 1971, the annual report shows.

A spokesperson for the pension fund did not return a phone call seeking comment.

Source: Institutional Investor

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