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(Bloomberg) -- Norway’s sovereign wealth fund, which owns more than 1 percent of global stocks, rose 192 billion kroner ($24 billion) in the third quarter as major indexes hit records amid a recovery in the global economy and a surge in oil and gas shares.
The $1 trillion Government Pension Fund Global returned 3.2 percent, after a 2.6 percent gain in the second quarter, the Oslo-based investor said on Friday. Stocks gained 4.3 percent, bonds rose 0.8 percent, and real estate investments grew 2.7 percent.
“In this quarter, the return on equity investments was driven by economic growth globally and good results from the companies,” CEO Yngve Slyngstad said in a statement. “We must be prepared for volatile stock markets and cannot expect such a return every quarter.”
Read more: World’s Biggest Wealth Fund Hits Obstacles on Plan to Cut FX
The fund has doubled in value over the past five years and was this year given the go-ahead to boost its stock holding to 70 percent of its portfolio to help drive returns. Norway last year also started withdrawing cash for the first time after sinking oil prices opened up holes in the budget.
Emerging stocks, which make up 10.2 percent of the fund’s equity holdings, returned 6.4 percent, while U.S. stocks, its single largest market with 35.9 percent, returned 3.2 percent. Oil and gas shares were the best preforming sector in the quarter with a 8.7 percent increase as increased demand for oil, OPEC’s quota discipline and lower production of shale oil in the U.S. boosted crude prices, the fund said.
Owning close to 1.5 percent of global stocks, the Norwegian fund largely follows indexes, but is allowed some active management of its portfolio.
Read more: Norway’s Central Bank Sees ‘Crossroad’ for $1 Trillion Fund
The fund held 65.9 percent in stocks in the quarter, 31.6 percent in bonds and 2.5 percent in real estate. Its mandate is to keep about 70 percent in stocks, 30 percent in bonds, with about 7 percent in real estate that’s now separate from the main portfolio. The fund beat its benchmark by 0.1 percentage point.
The government withdrew 10 billion kroner in the third quarter. It plans to increase withdrawals to 72 billion kroner next year.
The fund’s biggest equity investments in the quarter are Apple, Nestle and Royal Dutch Shell, while its largest fixed income holdings are U.S., Japanese and German government bonds.
The fund sent a new expectations document on tax and transparency to the 500 largest companies in its portfolio and participated in 45 initial public offerings in the quarter. It invested most in the Pirelli & C SpA, Landis+Gyr Group AG and Play Communications SA IPOs.
(Updates stock sector returns in 5th paragraph, IPO participation in last.)
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