The prospect of Covid-19 vaccine rollouts and expectations of further growth boosted stock markets and reduced credit premiums in Q1 2021.

“The stock market has coped well despite some rises in interest rates during this quarter,” says Folketrygdfondet CEO Kjetil Houg.

Government Pension Fund Norway

The return on the Government Pension Fund Norway (GPFN) totalled 3.9% in Q1, o.2 percentage points below the benchmark index. The quarterly return on the equity portfolio was 7.5%, 0.4 percentage points lower than the equities benchmark index. The return on the fixed-income portfolio was -1.8%, 0.3 percentage points better than the fixed-income benchmark.

“Following substantial increases in share prices, the GPFN sold equities for NOK 22.6 billion to bring the Fund’s equity ratio back down to 60% of the portfolio, as required by our mandate. This represents our largest re-weighting since the financial crisis,” says Kjetil Houg.

Over the past 10 years, the GPFN has achieved an average annual return of 8.4%, beating the market by 0.7 percentage points per year.

Government Bond Fund

Folketrygdfondet has managed the Government Bond Fund since March 2020. At quarter-end, the market value of invested capital was NOK 8.7 billion. The Government Bond Fund bought bonds for NOK 446 million in Q1 2021.

“We have downscaled our purchases of bonds from the most secure issuers as market conditions have improved,” says Kjetil Houg.