Norway’s sovereign wealth fund, the world’s largest, recorded an investment loss of US$30 billion in the third quarter. The loss was driven by a global bond market sell-off, the source says, caused by interest rate increases that weighed on returns from fixed-income holdings.
How the loss was recorded
The fund is managed by Norges Bank Investment Management (NBIM). On an accounting basis, NBIM reported a loss of 278 billion Norwegian kroner over the period. That is equivalent to US$29.7 billion.
Rising rates reduce the prices of bonds already in circulation. The fund’s fixed-income portfolio is mostly exposed to that effect.
Exposure to government debt
About 70 percent of the fixed-income portfolio is allocated to government bonds. The remainder is held in corporate debt. NBIM manages funds valued at US$2.3 trillion.
Source: Norges Bank Investment Management
