Norway's Government Pension Fund - Global, saw a 12.7 per cent return (NOK 270bn) in the second quarter of 2009, following dramatic improvements in international equity and fixed income markets, says Norges Bank.

The excess return was reported at 2.1 percentage points, which Norges Bank said is the best quarterly result ever, and the fund reached its targeted equities allocation of 60 per cent following a two-year transition period.

The third quarter so far has been positive also, and Norges Bank Investment Management's (NBIM) CEO, Yngve Slyngstad, confirmed that since March, the value of the fund has increased by more than NOK 600bn.

Transfers into the fund, although on a par with the first quarter of 2009, were markedly lower than previous years at NOK 40bn. Since the beginning of 2009, NOK 84bn has been transferred to the fund, compared with NOK 384bn for the whole of 2008.

Slyngstad added: "Economic developments showed clear signs of stabilising in the second quarter and the uncertainty around the financial sector decreased. Liquidity is beginning to return to a number of fixed income markets."

The equities share hit 60.3 per cent at the end of Q2, and in the two-year transition period, more than NOK 1,000bn in equities has been purchased by the fund. Fixed income contributed 3.7 percentage points in excess return to the fund, and the excess return from equity management was 0.7 percentage points.

In terms of the fund's active ownership strategy, revisions in the second quarter saw water resource management introduced as a new focus area, and an important breakthrough in industry cooperation to fight child labour.

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