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Folketrygdfondet: Coronavirus impacts first quarter performance

The Government Pension Fund Norway, which is managed by Folketrygdfondet, recorded a loss of NOK 31.5 billion in the first quarter of 2020, equivalent to a return of -11.7%. The fund capital totalled NOK 237.3 billion at quarter-end.

Infection control measures and a sharp slowdown in the global economy triggered falling share prices and an increase in credit premiums towards the end of Q1 2020. “Our performance was as expected, given the prevailing market conditions,” says Folketrygdfondet CEO Kjetil Houg.

The -11.7% return on the Government Pension Fund Norway was on a par with the first-quarter performance of the fund’s benchmark index. The Q1 return on the equities portfolio was -20.6%, 0.1 percentage points lower than the return achieved by the equities benchmark index. The return on the fixed-income portfolio totalled 2.5%, in line with the fixed-income benchmark index.

“The Norwegian market felt the effects of the coronavirus situation, sharp depreciation of the Norwegian krone and an unusually severe fall in oil prices, which dropped 66%. This clearly impacted the fund’s performance,” says Kjetil Houg.

Over the past 10 years, the annual return on the Government Pension Fund Norway has averaged 7.2%, with Folketrygdfondet outperforming the market by an average of 0.7 percentage points a year.

Folketrygdfondet has had responsibility for the administration of the revived Government Bond Fund since 27 March 2020, which is also the date of the fund’s first investment. The initial transaction came less than two weeks after the Government first announced the measure.

“We are confident that the Government Bond Fund will improve liquidity and access to capital in the Norwegian bond market,” says Houg.

 

Folketrygdfondet will report on the development of the Government Bond Fund in its Q2 2020 report.

 

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