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May 07, 2019

Norway SWF boasts ‘strongest quarter ever’

Investments in technology firms see highest returns but equities also perform well

The world’s largest sovereign wealth fund (SWF), Norway’s Government Pension Fund Global, which is run by Norges Bank Investment Management (NBIM), says Q1 2019 was its strongest quarter ever, with global stock markets recovering and the fund seeing a return of 9.1 percent – or around NOK738 bn ($84.4 bn).

While the highest returns came from NBIM’s investments in technology companies (17.6 percent), equities also performed well for the Norwegian fund, with investments returning 12.2 percent, according to a statement. ‘The overall return on the fund was 0.2 percentage points higher than the return on the benchmark index,’ it states.

‘This is the fund’s best ever quarterly return measured in kroner. As a major equity investor we must be prepared for large fluctuations in the fund’s market value in line with developments in global stock markets,’ says Yngve Slyngstad, CEO of NBIM, in a press release on the quarter.

NBIM adds that appreciation of the krone against ‘several of the main currencies during the quarter’ contributed to a decreasing of the fund’s value by around NOK60 bn.

As at March 31, 2019, the SWF had a market value of NOK8.9 tn, according to NBIM. Of this, 69.2 percent was invested in equities, 2.8 percent in unlisted real estate and 28 percent in fixed income. Unlisted real estate returned 1.7 percent and fixed-income investments 2.9 percent over Q1 2019.

Earlier this year NBIM announced it had brought all environment-focused mandates fully in-house in a bid to cut costs across its ESG investments after equity investments under these ESG-related mandates retuned -8.3 percent in 2018.

The fund is required by the Norwegian government to invest between NOK30 bn and NOK60 bn in dedicated environment-related mandates. ‘At the end of 2018, we had NOK43.3 bn invested in shares in 77 companies and NOK13.4 bn invested in green bonds under these mandates,’ said NBIM at the time the decision was announced.

Well known for taking a strong stance on ESG issues, the fund, which is invested in more than 9,000 companies and on average holds 1.4 percent of all of the world’s listed companies, recently announced its voting intentions on a number of ESG issues ahead of AGMs at three firms. 

Announcing that it would support a shareholder proposal for annual elections of board members at cereal and snack giant Kellogg Company on April 26, it said that while it doesn’t normally publish its voting intentions in advance, it will do so for selected companies to ‘highlight issues that are of fundamental importance to the fund’. 

NBIM added in a statement that ‘it is important for us to be predictable when we exercise our ownership.’ At the time, it also called for greater transparency at mining firm Grupo México, announcing its intention to vote against proposed election and ratification of directors at the firm’s AGM on April 30. 

Again announcing its voting intentions in advance, NBIM last week said it would vote in favor of a shareholder proposal on reducing water pollution at Pilgrim’s Pride Corporation, which took place on May 1.

Garnet Roach

An award-winning journalist, Garnet Roach joined IR Magazine in October 2012, working on both the editorial and research sides of the publication. Prior to entering the world of investor relations, her freelance career covered a broad range of...