NORWAY - The Government Petroleum Fund returned 2.93% in the first quarter of 2004, outperforming the benchmark by 0.24 percentage points.
The return on the equity portfolio was 3.83% in Q1 while the fixed income portfolio returned 2.24%. Returns on the Environmental Fund were 4.14%.
Executive director Knut Kjær said: “It was a good quarter. The strong returns were as a result of the externally managed equity portfolios, which performed very well. The internally managed equity portfolios and internally managed fixed income portfolios also contributed to the high returns.”
The market value of the fund increased by NOK 70bn (e8.5bn) over the quarter to NOK 915.3bn (e111bn) at the end of the first quarter.
The fund said that the increase since the beginning of the year was partly due to the transfer of new capital (NOK 22 billion), the return in capital markets (NOK 26 billion) and to the depreciation of the krone (NOK 22 billion). The market value of the fixed income increased by NOK 46.1bn to NOK 530bn in the first quarter. About 10% of this portfolio is managed externally. This includes mandates for US mortgage-backed bonds and active mandates with various strategies for outperforming the benchmark.
In the first quarter, the fund appointed two new managers – Insight Investment Management and European Credit Management – to run mandates for investment in Europe.
The equity portfolio grew to NOK 383.5bn, an increase of NOK 23.9bn. Around 17%, representing the finance, telecommunications, energy, media and trade sectors is managed actively.
Two new equity mandates were handed out: a regional mandate in the US was assigned to Wellington Management Company and a global sector mandate was assigned to the Oslo-based Sector Asset Management.
Asset allocation stands at 58% fixed income and 42% equities. The fund has no plans to invest in alternatives in the near future.
A number of pension schemes have been prompted to lock in gains with a move into bonds after the estimated deficit across FTSE 100 DB pension schemes improved by £36bn, over the 12 months ending 30 June last year, JLT Employment Benefits found.
HM Treasury has agreed in principle to give NEST a £329m contingent liability guarantee in the event of the master trust's wind up or closure.
AMP Capital has set up a dedicated team to help institutional investors, including pension funds, invest in infrastructure through direct equity allocations.