Norwegian Govt Pension Fund Global returned 6.9% in 2016
Written by Natalie Tuck
Norges Bank Investment Management has revealed the Norwegian Government Pension Fund Global returned 6.9 per cent in 2016, equivalent to NOK 447bn.
Commenting on the results, Norges Bank chairman of the executive board Øystein Olsen said the board is satisfied that the return in 2016 and over the longer term has been good.
“The board is also satisfied that management costs have been kept at low levels despite the gradual expansion of investments into new markets”.
Equity investments returned 8.7 per cent and fixed-income investments 4.3 per cent. The overall return on the fund’s equity and fixed-income investments was 0.1 percentage point higher than the return on the benchmark index. Real estate investments returned 0.8 percent.
Norges Bank Investment Management CEO Yngve Slyngstad said: “The return in 2016 was characterised by falling international interest rates in the first half of the year, and strong equity markets in the second half.
“The year began with a downturn in the markets, and uncertainty regarding developments in China. Three weeks into the year, global equity markets were down by 10 per cent. The markets stabilised through the year, and also in 2016 the equity investments returned well”.
The krone strengthened against many of the main currencies during the year, which reduced the fund's value by NOK 306bn. Net withdrawals from the fund was NOK 101bn. The first inflow to the fund was in May 1996. The first withdrawal was in January 2016.
The fund had a market value of NOK 7,510bn at 31 December 2016, of which 62.5 per cent was invested in equities, 34.3 per cent in fixed income and 3.2 per cent in real estate.