Norway's Wealth Fund Posts $30 Billion Loss as Rising Rates Hit Bonds

Norway's sovereign wealth fund, the world's largest with assets of around €2.1 trillion, reported an investment loss of 278 billion kroner (€26.4 billion) on Thursday, weighed down by higher interest rates. Norges Bank Investment Management, which manages the fund, reported a negative return of 3.5% on fixed income investments, which account for just over one quarter of its portfolio. Around 70% of these holdings are government bonds. The third quarter saw a global bond sell-off, with government bond yields rising to levels not seen since the financial crisis amid concerns over mounting government debt in the US and EU, as the Federal Reserve and European Central Bank raised key rates. The fund's overall investment return was −0.5%, while its equity investments gained 0.5%. Energy companies rose the most, while rate-sensitive sectors such as utilities and real estate fell, said Deputy CEO Trond Grande. Real estate returned 0.4% and unlisted renewable energy infrastructure 7.5%. At the end of September, the fund was worth 22,014 billion kroner (€2.09 trillion), with 72.1% in shares and 25.8% in bonds. Including currency movements and new money, total value fell by 670 billion kroner (€63.6 billion) during the quarter.