(Bloomberg) — Norway’s sovereign wealth fund rose 412 billion kroner ($44 billion) in the third quarter as global stock markets continued to rally.
The $1.2 trillion fund’s overall return was 4.3%, which was 3 basis points less than the benchmark set by the nation’s finance ministry. The positive run followed a negative return of 3.4% in the first half.
The world’s largest wealth fund is set to increase its bets on U.S. equities, where tech firms are posting blistering returns amid optimism they’re best poised for the post-pandemic economy. Norway is also tapping the fund to ease the impact of Covid-19 on its citizens, and plans to make record withdrawals this year.
“The financial markets were still influenced by uncertainty related to the coronavirus,” said Nicolai Tangen, chief executive officer of Norges Bank Investment Management. “Regardless, equity markets returned well, mostly due to strong performance in the technology sector in the U.S.”
The results are the first under Tangen, who joined on Sept. 1 after a selection process tinged by controversy over conflicts of interest and hospitality the former hedge-fund manager offered to his predecessor.
Read More: Fund Set to Raise U.S. Stock Exposure
The fund’s stock portfolio — the majority of its holdings — rose 5.7%, while fixed income investments gained 1.1%. Investments in unlisted real estate returned 0.9%.
Underperforming real estate “is something you typically see when equity markets rise,” Deputy CEO Trond Grande said by phone.
The fund had 70.7% of its assets invested in equities at the end of Sept., 2.7% in unlisted real estate, and 26.6% in fixed income. Its policy is to rebalance the portfolio when the equity proportion surpasses 72% or falls below 68%.
The government plans to withdraw about 347 billion kroner in 2020. In the third quarter, it withdrew 105 billion kroner, NBIM said.
Tangen, 54, was tapped in March to run the fund, but the appointment quickly came under fire. When he was still running his hedge fund, he offered Yngve Slyngstad, who headed the wealth fund, a free private jet flight back from a lavish U.S. conference he organized last year at the Wharton business school. After a lengthy process, Tangen had to sell his stake in AKO Capital LLP, the fund he spent years building.
(Adds comments by deputy CEO and background on Tangen’s hiring.)
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