NORWAY - The Government Pension Fund - Global, also known as the Oil Fund, said its end of year results for 2008 were the worst in its history, with a total loss of -23.3%.
Weak returns on the equity portfolio of -40.7% led the overall loss. Fixed income investments lost 0.5%. As a result, the fund said once management costs and inflation were deducted, its annualised net real return since 1998 had fallen to 1%.
Governor of Norges Bank and chairman of the fund's executive board Svein Gjedrem said: "The financial crisis has dealt a heavy blow to our investments in global equity and fixed income markets. The annual real return since Norges Bank commenced the operational management of the Government Pension Fund - Global is now just 1 per cent, which is well below the long-term return of 4 per cent assumed by the State.
Gjedrem continued: "The fund has not reaped a risk premium in the equity market as we had expected."
In light of the results, the fund added it would strengthen its risk management capabilities, focusing in particular on supplementary methods for measuring risk, although no more details were available.
The Government Pension Fund - Global, which pursues an equity-heavy investment strategy (49.6% of the portfolio), now holds an equivelent of 0.77% of all "global equity markets".
Last week, the country's domestically focused scheme, the Government Pension Fund - Norway, revealed it lost over 25% during 2008, ending the year with assets under management of NOK87.8bn, down 25.1% from NOK113.3bn in 2007 (Globalpensions.com; 5 March 2009)
Despite the losses, the fund said active management of its portfolio had helped it outperform its benchmark by 3.7%, or NOK4.3bn.
The Co-operative Group's Somerfield Pension Scheme has completed a buy-in with Pension Insurance Corporation (PIC), insuring the benefits of its pensioner members.
Caroline Rookes CBE and Michele Hirons-Wood have joined The Pension Superfund's board of trustees to focus on maintaining governance standards and safeguarding member benefits.
The first specialist independent firm advising pension schemes on bulk annuities or moving to a consolidator has been set up with ambitions to shake up the market.