Norway's $2.3tn fund loses $29.7bn as it plans Treasury cuts

Norges Bank Investment Management lost 278 billion kroner ($29.7 billion) in the three months to September, with its fixed income portfolio returning -3.5% as government bonds sold off. Hedgeweek reported the loss on Oct. 22, citing CNBC, and put the fund's assets at $2.3 trillion.

Fixed income is just over a quarter of the fund's assets, and roughly 70% of that book sits in government debt, with the balance in corporate securities, according to the report. Equities, about 72% of the portfolio, returned 0.5%; unlisted real estate added 0.4% and renewable energy infrastructure returned 7.5%. Hedgeweek attributed the bond fall to central bank rate rises and government borrowing concerns.

Advisors who hold government bonds as the defensive sleeve in client portfolios now face a quarter in which that sleeve returned -3.5% while NBIM plans to cut its US Treasury holdings. The fund's fixed income book is more than $575 billion, of which over $400 billion is government debt; Hedgeweek did not specify the size or timetable of the reduction.

The loss reversed a first half in which the fund returned 12.95% and booked nearly $185 billion of investment gains. "The fund's return was close to flat, ending slightly negative as rising interest rates led to weaker results on our fixed-income investments," deputy CEO Trond Grande said. NBIM's fourth-quarter report will show whether the September plan changed Treasury exposure or only intent.