The value of the Norwegian Government Pension Fund – also called the Oil Fund – in the third quarter of the year experienced the biggest losses in its history. The fund was established in year 1990.
In the period, the fund lost 173 billion NOK, NRK reports.
“The third quarter of 2008 was an unusually demanding quarter for the management of the Government Pension Fund – Global. Uncertainty in financial markets increased dramatically, and this affected the return on the fund,” says Yngve Slyngstad, CEO of Norges Bank Investment Management (NBIM), writes in a press release.
The market value of the Government Pension Fund – Global at the end of the third quarter was 2.120 billion NOK. In the period, record-high transfers of 128 billion NOK were made to the fund.
Despite the losses, the fund administrators are stepping up the acquisition of new stocks. The Ministry of Finance has decided to increase the allocation to equities in the fund from 40 to 60 percent. At the end of the third quarter, the allocation to equities had risen to 53 per cent, the bank reports.
The new stocks are bought for prices up 70 percent lower than their value just few weeks ago. In the longer run, the new stock acquisitions could significantly strengthen the power of the government fund.
