Norway’s sovereign wealth fund lost 633 billion kroner, or $91 billion, on investments in 2008, posting its weakest return in its 10-year history at negative 23.3%.
The value of the Government Pension Fund-Global still grew to 2.275 trillion kroner in the fourth quarter from 2.120 trillion at the end of the third quarter, due to new inflows from oil and natural gas sales and currency adjustments.
Commonly known as the “oil fund” and run by the Norwegian central bank, the fund invests oil and natural gas money in foreign stocks and bonds to save for future generations when resources run out.
“The global financial crisis in 2008 presented major challenges to all parts of the portfolio of the Government Pension Fund-Global,” says central bank.
“The result for the year was the weakest in the fund’s history and has led to a number of changes in the implementation of the investment strategy. The long-term strategy is unchanged.”
Nearly 50% of the fund was allocated to stocks at the end of 2008, down from about 53% at the end of the third quarter. The fund is slowly seeking to boost the equity portion of its total holdings to 60%.
“The fund has a much longer investment horizon than the vast majority of investors,” says Yngve Slyngstad, the fund’s manager. “The key question is, therefore, how good today’s investments will prove in the long term.”
L.D.