Norway's oil fund makes 3Q loss as crisis bites

OSLO — Norway's vast fund for oil wealth investment posted a 7.7 percent loss on investment for the third quarter, but still grew in size due to record transfers of surplus wealth from the national government, the central bank announced Tuesday.

The value of the Government Pension Fund-Global was 2.12 trillion kroner ($303 billion) at the end of the July through September quarter, following the largest infusion of money from the central government — 128 billion kroner — in any single quarter due to high crude oil prices, the Norges Bank said.

The fund was worth about 1.93 trillion kroner a year earlier.

Despite the cash infusion, the fund's investments suffered their worst performance since the fund was founded in 1996 to invest Norway's excess oil wealth.

"Uncertainty in financial markets increased dramatically, and this affected the return on the fund," said Yngve Slyngstad, head of the fund.

The fund is gradually shifting some investment from government bonds to higher risk and potentially higher yield stock equities, which now account for about 53 percent of its holdings. The change came after the Ministry of Finance, which controls the fund, raised a cap for stock investments to 60 percent from 40 percent.

The fund "is in a unique position in today's market, and we are making record-high purchases in the equity market in 2008," said Slyngstad. "It is possible for us to have a long time horizon for our investments."

He has said earlier that the fund is probably the largest equity investor in Europe, with holdings in 7,000 companies worldwide.

The Nordic nation of 4.7 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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On the Net:

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