Norwegian domestic fund loses 25%

The Government Pension Fund - Norway, managed by social security body Folketrygdfondet on behalf of the government, ended the year with assets under management of NOK87.8bn (US$12.3bn), down 25.1% from NOK113.3bn in 2007.

Despite the headline losses, the fund - which is mandated to invest heavily in Norwegian and Nordic-region assets - said it had actually outperformed its benchmark by 3.7%, or NOK4.3bn thanks to active management of its investments.

Fund chief executive Olaug Svarva said: "In a historically turbulent and challenging year in the equity and fixed income markets, we can determine that Folketrygdfondet through reasonable management has contributed to a result that is NOK4.3bn higher than the [benchmark] portfolio.".

The fund said the poor performance was due to declines on domestic and Nordic equities, with holdings Norwegian equities the worst hit, declining 49.1%, although this was less than the wider Norwegian market fall of 54.06%.

Similarly, open market Nordic (Norway, Denmark, Finland and Sweden) shares fell 37.47% while the fund's holdings fared slightly better, declining 32.75%.

The Government Pension Fund - Global, the 'oil revenue' reserve fund designed to safeguard future pension payments, is due to present its annual report and 2008 operating results shortly, although it reported a third quarter loss of 7.7%, standing at NOK2.12trn at the end of the period.

At the time, the fund said it had actually increased its equity allocations due to the long term nature of its investment horizon (Globalpensions.com; 25 November 2008).