Norway’s renowned sovereign-wealth fund, commonly referred to as the oil fund, faced a setback in the third quarter of 2023. The fund reported a negative return of 2.1%, resulting in a loss of 374 billion Norwegian kroner ($33.76 billion). This decline was primarily driven by a weaker equity market and a stronger krone.
According to Norges Bank Investment Management, the division responsible for managing the fund, its market value stood at NOK14.801 trillion as of September 30th.
Factors Contributing to the Decline
Trond Grande, the Deputy Chief Executive of Norges Bank Investment Management, highlighted that the stock market performed poorly in comparison to the preceding quarters. Notably, the tech, industrials, and consumer discretionary sectors were the major contributors to the negative return.
The report revealed that equity investments experienced a negative return of 2.1%, fixed income investments suffered a negative return of 2.2%, unlisted real estate faced a negative return of 3.3%, and unlisted renewable energy infrastructure endured a negative return of 2.4%.
Impact of Currency Movements
During the quarter, the Norwegian krone strengthened against several major currencies, resulting in a decrease in the fund’s value by NOK264 billion.
Asset Allocation Breakdown
As of the end of the quarter, the fund’s asset allocation was as follows: 70.6% invested in equities, 27.1% in fixed income, 2.2% in unlisted real estate, and 0.1% in unlisted renewable-energy infrastructure.
This latest performance report showcases the challenges that the Norway sovereign-wealth fund faced in the third quarter of 2023.
