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First half-year 2020: Strong returns through active investment

The Government Pension Fund Norway, which is managed by Folketrygdfondet, achieved a profit of NOK 19.6 billion in Q2 2020, equating to a return on capital of 8.3%. The fund capital totalled NOK 257 billion at quarter-end. The Government Bond Fund – established on 27 March in response to the Covid-19 epidemic – totalled NOK 3.7 billion across 44 bonds at the end of Q2.

Government Pension Fund Norway

“We have exploited market movements to increase our portfolio risk during the crisis,” says Folketrygdfondet CEO Kjetil Houg.

The return on the Government Pension Fund Norway (GPFN) totalled 8.3% in Q2, o.4 percentage points higher than the benchmark index. The quarterly return on the equity portfolio was 11.6%, 0.6 percentage points lower than the equities benchmark index. The return on the fixed-income portfolio was 3.5%, 1.8 percentage points above the fixed-income benchmark.

As at 30 June 2020, the GPFN’s return for the year was -4.41%, 0.32 percentage points better than the benchmark return.

“As markets fell in response to the Covid-19 outbreak, the GPFN bought equities for a total of NOK 7.6 billion, equating to 3.2% of the fund capital. We also exploited substantial movements in the credit market to taken on more risk in the fixed-income portfolio. This paid off in the second quarter,” says Kjetil Houg.

Over the past 10 years, the GPFN has achieved an average annual return of 8.6%, outperforming the market by 0.7 percentage points per year.

Government Bond Fund

Folketrygdfondet has been responsible for managing the re-established Government Bond Fund since 27 March 2020. The first investments were made the same day, less than two weeks after the Government had announced the measure. At the end of Q2, the Government Bond Fund was invested in 44 bonds totalling NOK 3.7 billion.

“We have contributed to the proper functioning of the market in accordance with our mandate,” says Kjetil Houg.