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Norway’s Wealth Fund Delivers $28.5 Billion Gain Ahead of Plunge

Stock MarketsAug 21, 2019 05:47AM ET
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(Bloomberg) -- Norway’s $1 trillion wealth fund rose $28.5 billion in the second quarter ahead of market turmoil that drove equities lower over the past month and saw bond yields plunge further below zero.

  • Fund returned 3%, or 256 billion kroner ($28.5 billion)
  • Stocks rose 3.0%, bonds 3.1% and real estate 0.8%
  • Fund held 69.3% in equities, 28.0% in bonds and 2.7% in real estate
“Uncertainty about global trade and economic growth dampened returns early on, but markets rallied toward the end of the period driven partly by the prospect of more expansionary monetary policy in developed markets,” Norges Bank Investment Management’s Deputy Chief Executive Officer Trond Grande said in a statement.

The Oslo-based fund, which holds 1.4% of global stocks on average, closely mirrors the broad markets, though it has some leeway in how it weighs indexes and strays from its benchmarks. The fund snapped up stocks in a selloff at the end of last year, then hitting its long-term target of 70% in equities.

The investor, built from Norway’s oil and gas riches, has pared losses from 2018 but faces a tough market outlook amid a turbulent month.

The fund said it has more than 600 billion kroner in bonds with negative yields, or about a quarter of its fixed-income portfolio, adding pressure as it struggles to keep up with its 3% real return target.

The largest stock holdings at the end of the quarter were Microsoft Corp (NASDAQ:MSFT)., Apple Inc (NASDAQ:AAPL). and Amazon.com Inc (NASDAQ:AMZN). Its largest bond holdings were in U.S. Treasuries, followed by Japanese and German government debt.

In the second quarter, the government deposited 6 billion kroner into the fund, down from 8 billion kroner in the first quarter.

The fund’s return in the quarter missed its benchmark by 0.2 percentage point.

Norway’s Wealth Fund Delivers $28.5 Billion Gain Ahead of Plunge
 

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