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More woe for Norwegian pension funds
5 March 2009

Written by Sophie Baker

Norway's Government Pension Fund lost NOK 29.6bn (€2.95bn) in 2008, a massive drop attributed to the equities, according to figures from Folketrygdfondet.

The asset manager is a state-owned company, and is solely responsible for the domestic pension fund which invests only in Nordic countries. It has confirmed in its annual report for 2008 that the scheme had dropped by NOK 25.2bn, from NOK 113bn in 2007, to NOK 87.8bn at the end of 2008.

The pension fund returned -25.1 per cent overall, with positive returns coming from fixed income in Norway (8.48 per cent yield) and in other Nordic countries (23.49 per cent). The fund has a target allocation of 60 per cent in equities, and in 2008 44.5 per cent of the fund was invested in Norwegian equities, returning -49.2 per cent. The remainder of was invested in equities in Denmark, Finland and Sweden (8.5 per cent), and 38.8 per cent of the fund was invested in Norwegian assets. The final 8.2 per cent was in other Nordic countries.

“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 NOK 4.3bn higher than the benchmark,” said Olaug Svarva, managing director of the asset manager.

The Norwegian equity portfolio, although returning -49.2 per cent, actually outperformed the benchmark by 4.9 percentage points. The Nordic securities portfolio also presented a negative return, of -32.8 per cent, although this also outperformed the benchmark in the reference portfolio (37.47 per cent) by 4.72 percentage points.

The only sector to underperform the benchmark return was the fixed income portfolio from Denmark, Finland and Sweden, 1.13 percentage points lower than the mark, at 24.62 per cent.