Norway’s sovereign wealth fund is the largest of its kind in the world, but it faced the same problems as other investors in the first quarter of the 2018 when a falling stock market turned its returns negative after a long run of success.
The fund, which has a market value of 8.124 trillion Norwegian kroner USDNOK, -0.3065% or $1.02 trillion, lost 1.5% in the first three months of 2018. That equates to 171 billion kroner — a cool $21.4 billion.
“The quarter was colored by increased volatility in global stock markets,” read the fund’s press release on Friday. In February, global stocks and risk assets were shaken, while U.S. bond yields steadily crept higher. Yields and prices move in opposition with one another.
The decline marked the fund’s first quarterly loss in two years. Its equity investments, which account for 66.2% of the fund’s holdings and are focused on U.S. stocks, registered a 2.2% loss, while its fixed income investments that make up 31.2% of holdings dropped 0.4%.
In 2017, the Norway’s U.S.-centric investment view played in its favor, leading it to rake in $131 billion in returns, as U.S. stocks set a string of records.
With such a high concentration in global equities, these fluctuations are to be expected. Not every year will be a record and the fund’s “value [is] predominantly determined by the development in global stock markets,” said Yngve Slyngstad, chief executive of Norges Bank Investment Management, which is the home of the fund.
Elsewhere, Norway’s investments in unlisted real estate assets, which account for 2.7% of all holdings, returned 2.5% in the quarter.