Norway's sovereign wealth fund posts -0.6 pct return in Q1

Norway's sovereign wealth fund posted a -0.6 percent return, or a loss of 85 billion kroner (10 billion U.S. dollars), in the first quarter of 2016 due to high market volatility in the global economy, the fund said on Thursday.

Equity, fixed-income, and real estate investments returned -2.9 percent, 3.3 percent and -1.3 percent respectively in the quarter, according to a statement of the fund, formally known as the Government Pension Fund Global (GPFG) and ranked as the world's biggest sovereign wealth fund.

"The two first months of 2016 were characterized by high market volatility and concerns for a Chinese slowdown. The turbulence eased considerably in March," said Trond Grande, deputy chief executive officer (CEO) of Norges Bank Investment Management, which is the part of the Norwegian central bank responsible for managing the fund.

"Falling interest rates resulted in price gains on the fund's fixed-income investments. However, lower interest rates have negative long-term implications for future returns on the fixed-income portfolio," he said.

The Norwegian government extracted 25 billion kroner (3 billion U.S. dollars) from the fund in the first quarter, which was the first time it withdrew money from the country's huge sovereign wealth fund, according to the statement.

The fund had a market value of 7.08 trillion kroner (870 billion U.S. dollars) on March 31, of which 59.8 percent was invested in equities, 37.0 percent in fixed income, and 3.1 percent in real estate. Endit