Norway's oil fund sees record returns in Q3

OSLO - Norway's oil fund posted a record quarterly return of 13.5 percent on investments in the third quarter due to a rebound in international stock markets, the central bank said Tuesday.

Norges Bank said the 325 billion kroner ($58.2 billion) in returns lifted the value of the Government Pension Fund-Global to 2.55 trillion kroner at the end of the July-September quarter. The fund was worth about 2.12 trillion kroner a year earlier.

Norway invests its vast oil wealth in the sovereign wealth fund, commonly known as the oil fund, which it uses to finance its cradle-to-grave welfare system while protecting against inflation.

"The strong upturn in markets in the second quarter continued in the third quarter," said Yngve Slyngstad, chief investment manager at Norges Bank.

The high returns, building on gains of 12.7 percent in the previous quarter, marked a turnaround for the oil fund after it suffered its worst year ever in 2008 — when it lost 23 percent as the financial crisis caused asset prices to nosedive in the final months of that year.

Since 2007, the fund has shifted about one-fifth of its investments from government bonds to higher risk and potentially higher yield stock equities, which now account for about 62 percent of its holdings. The change came after the Finance Ministry, which controls the fund, raised the target for stock investments to 60 percent from 40 percent.

Slyngstad has said that Norway's oil fund is probably the largest equity investor in Europe, with holdings in 7,000 companies worldwide.

The Nordic nation of 4.8 million people is a major oil and natural gas exporter, and invests surplus oil revenue abroad to avoid overheating its domestic economy.

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