The Norwegian Central Bank reports a negative return for 2008 on the Government Pension Fund – Global in international currency of 23.3 per cent, equivalent to NOK 633 billion, the weakest result in the Fund's history.

The return on the fund was 3.4 percentage points weaker than that on the benchmark portfolio defined by the Ministry of Finance. The fund has generated an annual real return of 1.0 per cent since it was started up in 1998. Previous years’ excess returns relative to the benchmark portfolio were cancelled out in 2008 to leave a cumulative negative excess return of 0.04 percentage point. Fixed income management produced a negative excess return of 6.6 percentage points in 2008.

“We have reduced the absolute size of positions, especially on the fixed income side, to the extent possible,” says Yngve Slyngstad, Executive Director of Norges Bank Investment Management (NBIM). “We have also made significant changes to the mandate structure, especially for external fixed income management.”

The fund has large holdings of bonds with limited liquidity in today’s market. Realised losses on the fixed income portfolio have been limited, however, and the portfolio is generating a high yield.

“The fund has a much longer investment horizon than the vast majority of investors,” says Slyngstad. “The key question is therefore how good today’s investments will prove in the long term.”

- The results of the Pension Fund – Global, which were presented by Norges Bank today, show that the Fund in 2008 was strongly influenced by the global financial crisis, says the Norwegian Minister of Finance, Ms Kristin Halvorsen.

The management of the Fund has come under severe criticism by some financial experts, as well as the political opposition.

The Government Pension Fund was established by Act in 2006 to support a long-term management of petroleum revenues and facilitate the government’s accumulation of financial assets in order to help cope with large, future financial commitments associated with an ageing population.

(NRK/NB/Press release)

Rolleiv Solholm