Norway’s US$1 trillion wealth fund is getting increasingly concerned about the state of global stock markets.
Fund chief executive Yngve Slyngstad yesterday said that it is a “warning signal” that a dwindling number of stock markets are doing well and that within each market “fewer and fewer” companies are driving performance.
“We are prepared for market turmoil,” he told a news briefing.
The fund, built from Norway’s oil wealth, had a gain of 2.1 percent, or US$21 billion, in the third quarter.
North American stocks rose, while the rest of the global equity markets had weaker development, the fund said.
Owning on average about 1.4 percent of all global stocks, the fund has few places to hide given its strategy of hewing closely to indices and spreading its investments broadly across world markets.
It is now facing increasing headwinds after years of high returns, with a potential for losses this quarter amid a broad market sell-off from New York to Tokyo.
The fund last quarter gained 3.1 percent on shares and lost 0.3 percent on bonds, while real estate provided a 1.9 percent gain.
At the end of the quarter, it held 67.6 percent in shares, 29.7 percent in bonds and 2.7 percent in real estate.
The overall return was 0.2 percentage points lower than the return on the benchmark index.
Healthcare shares made the most positive contribution to returns, followed by technology.
The largest share holdings at the end of the quarter were Apple Inc and Amazon.com Inc.
Its largest bond holdings were US Treasuries, followed by Japanese and German government debt.
The fund is also in the midst of increasing the portion of shares in its portfolio to 70 percent after getting the go-ahead last year.
The remainder would be held in bonds, while it can also hold a maximum of 7 percent of its investments in real estate.
The fund is in “no rush” to lift its portion of shares to 70 percent, Slyngstad said, adding that the process could take “years.”
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