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Norway's sovereign fund gained $47b last year on global recovery

Large equity purchases during the financial crisis yield solid returns

Gulf News

Oslo: Norway's sovereign wealth fund, the world's second largest, rose 264 billion kroner ($47 billion/Dh171 billion) last year as a recovery in global growth and corporate profits spurred a second year of gains in stocks.

The Government Pension Fund Global returned 9.6 per cent, adding to 26 per cent gain in 2009, as measured by a basket of currencies, the Oslo-based investor said yesterday. The $548 billion fund's stock holdings returned 13.3 per cent, while its bond investments climbed 4.1 per cent.

Better than expected

Stocks rallied last year, led by emerging markets, as economies improved in countries such as the US and China, companies reported better-than-expected earnings, and central banks kept record low interest rates. The MSCI World Index of stocks rose 9.6 per cent in 2010, and reached a two-year high in the fourth quarter.

"The fund also benefitted from its long-term approach as large equity purchases during the financial crisis in 2008 and in the first half of 2009 yielded solid returns," said Yngve Slyngstad, chief executive officer of Norges Bank Investment Management, in a statement. "The value of our fixed-income investments also continued to recover after steep price drops two years earlier."

The fund last year raised holdings in Italian and Spanish debt, while cutting holdings in Greek, Portuguese, and Irish government debt, Slyngstad said. The fund held 10.9 billion euros in bonds from these countries last year, up from 5.8 billion euros in 2009. The fund said it was underweight in all peripheral European bonds compared with the index it follows, with the exception of Greece, which was removed from the index.

EU leaders last week agreed on a re-tooled plan and eased the terms of Greek loans to stem a contagion.