Norway’s $1.4 trillion sovereign wealth fund, the world’s largest, posted a 374 billion crown ($33.80 billion) loss in the third quarter, it said on Tuesday, after sustaining heavy drops in the value of equities and bonds.
The fund’s return on investment was minus 2.1% for the July-September period, 0.17 percentage points stronger than the return on its benchmark index.
Equities – its biggest asset class, accounting for 70.6% of its value in the quarter – recorded a 2.1% loss. Fixed income investments, which account for just above another quarter of its assets, returned a loss of 2.2%, and real estate assets of 3.3%.
The broad-based nature of the decline “maybe indicates that there is a little bit of a fundamental macro factor driving this and … one would point to the continued rising interest rates,” Deputy CEO Trond Grande told Reuters.
Equities over the past year have outperformed compared to other asset classes, said Grande.
But there too, the fund had “a little bit of… concern”, Grande said, as the growth was “really concentrated on a few super large U.S. tech companies”.
Asked whether he saw a higher risk of a correction in markets now compared with three months ago, Grande said he did not.
Still, “we’ve been warning that we come from a rather long period of low interest rates, and also expansive… fiscal policies”, he said.
“When the interest rates rise this much and this fast, obviously there’s going to be businesses that need to refinance and finance themselves on higher rates. And the question is if all are well positioned to do that with the profitability.”