Oil Fund -4.8% due to bonds losses
NORWAY- The Government Pension Fund - Global posted a loss of 4.8% for the first quarter of 2009.
Norges Bank, which manages the assets of the so-called Oil Fund said in a statement this represented a negative return relative to the benchmark portfolio of 0.3 percentage point, equivalent to NOK66bn (US$10.3bn).
The market value of the fund was NOK2.076trn at the end of the quarter, down from NOK2.27trn at the end of 2008. Inflows of new capital into the fund came to NOK44bn, the lowest figure since the fourth quarter of 2004.
The quarterly report showed the negative excess return relative to the benchmark portfolio due to a continued decline in the value of existing fixed income positions.
The report said: "Within fixed income management, it was especially bonds issued by banks and financial institutions that contributed to the negative result. Bonds with the status of core and supplementary capital fell substantially in value during the quarter as the market asked questions about the capital position of most banks. These positions were established before the financial crisis began in 2007 and are currently illiquid."
Performance has improved moving into the second quarter.
Norges Bank Investment Management (NBIM) chief executive officer Yngve Slyngstad said: "In the parliamentary hearing in late April, we stated that the fund's performance at the time was flat in terms of both absolute and relative returns. The market recovery seen in March has continued into the second quarter."
The market value of the fund was NOK2.076trn at the end of the quarter, down from NOK2.27trn at the end of 2008. Inflows of new capital into the fund came to NOK44bn, the lowest figure since the fourth quarter of 2004.
The quarterly report showed the negative excess return relative to the benchmark portfolio due to a continued decline in the value of existing fixed income positions.
The report said: "Within fixed income management, it was especially bonds issued by banks and financial institutions that contributed to the negative result. Bonds with the status of core and supplementary capital fell substantially in value during the quarter as the market asked questions about the capital position of most banks. These positions were established before the financial crisis began in 2007 and are currently illiquid."
Performance has improved moving into the second quarter.
Norges Bank Investment Management (NBIM) chief executive officer Yngve Slyngstad said: "In the parliamentary hearing in late April, we stated that the fund's performance at the time was flat in terms of both absolute and relative returns. The market recovery seen in March has continued into the second quarter."
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