Norway Wealth Fund Loses 4.4% as Inflation, Rate Hikes Bite

(Bloomberg) — Norway’s $1.2 trillion sovereign wealth fund reported its third quarterly loss in a row as global markets were rattled by aggressive interest rate hikes to combat rising inflation.

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The Oslo-based fund, the world’s largest, lost 4.4% in the third quarter, equivalent to about $43 billion, according to a statement on Friday. Overall, the fund’s total return was 0.14 percentage points higher than the benchmark against which it measures itself.

The investor, who owns a portfolio of about 9,000 stocks, is trying to navigate a mix of rising inflation, rising interest rates and the fallout from Russia’s invasion of Ukraine that has caused ongoing losses for the fund since the beginning of the year.

“It also affected the markets. The return was negative for equities, fixed income, and unlisted real estate,” Deputy Chief Executive Officer Trond Grande said in the statement.

Built from the North Sea’s oil and gas wealth, Norway’s wealth fund has warned about what it sees as a prolonged slowdown in markets after achieving an average return of 6% during the quarter of a century when it existed.

The fund lost 4.8% in stocks, and 3.9% in its fixed-income investments. Its unlisted real estate holdings fell 1.1%. Investors peeked into renewable-energy infrastructure for the first time last year, eyeing a return of 4.2% in 2021 only to see investment decline 3.7% in the third quarter.

The government deposited 306 billion kroner ($29.6 billion) into the fund in the quarter.

(Updates with comment, details from the third quarter)

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