By Mario Marroquin
A combination of geopolitical turbulence in Eastern Europe and broader market instability is wreaking havoc within the world’s largest pension funds. According to a release from Norges Bank Investment Management, Norway’s Government Pension Fund Global lost 653 billion kroner ($73.7 billion), or -4.9%, in value in the first quarter, chiefly due to poor performance across its fixed income and equity holdings.
Losses—and gains—in the first quarter within the 11.6 trillion NOK pension fund break down as follows:
· Fixed income, which comprised 26.3% of the funds’ allocations as of March 31, saw a -4.8% return
· Equity investments, which comprise 70.9% of fund’s allocations, saw a return of -5.2%
· Unlisted real estate, which comprised 2.7% of the fund’s allocations, saw a return of 4.1%
· Unlisted renewable energy infrastructure, which makes up less than 1% of the fund’s allocations, dipped -3.3%
“The first quarter has been characterized by geopolitical turbulence, which has also affected the markets,” Norges Bank Investment Management deputy CEO Trond Grande said in a prepared statement.
Norges Bank said the fund’s value at the end of 2021 reached 12.3 trillion NOK with an aggregate quarterly return of 4.6%.
Reuters reported in late February that Norway Prime Minister Jonas Gahr Støre said the fund would be divested from its Russian assets following the invasion of Ukraine. However, Bloomberg reported this week that implementing the change in policy was troublesome after Russia banned foreigners from executing trades on its stock market.
Norges Bank reported that as of December 2021, the fund’s investments across Russia, Ukraine and China comprised 3% of all investments at a value of 363.6 billion NOK.