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2Q 2004 Quarterly report

The return on the Government Petroleum Fund in the second quarter of 2004 was -0.15 per cent measured in terms of the currency basket that corresponds to the composition of the Fund’s benchmark portfolio. The overall return in the first half of 2004 was 2.77 per cent.

The second quarter return on the ordinary equity portfolio (excluding the Environmental Fund) was 1.87 per cent measured in terms of the benchmark portfolio’s currency basket. Equity prices in all three main markets rose through the quarter. The return on the fixed income portfolio was -1.59 per cent measured in terms of the currency basket. Bond yields in all the main markets rose in the second quarter.

The return on the Petroleum Fund’s ordinary portfolio in the second quarter of 2004 was 0.08 percentage point higher than the return on the benchmark portfolio defined by the Ministry of Finance. The overall excess return in the first half of 2004 was 0.32 percentage point. T

he second quarter return on the Environmental Fund was 1.45 per cent measured in terms of the benchmark portfolio’s currency basket. The overall return in the first half of 2004 was 5.65 per cent.

During the quarter, new capital equivalent to NOK 29.6 billion was transferred to the Petroleum Fund’s international equity and fixed income portfolios. The Petroleum Fund’s market value was NOK 942.4 billion at the end of the second quarter, which is an increase of NOK 27.0 billion during the quarter and an increase of NOK 97.1 billion since year-end.

The increase in market value in the second quarter is a result of the transfer of new capital. Negative returns in the markets and a stronger krone in relation to the currencies in which the Fund is invested contributed to reducing the Fund’s market value by NOK 1.0 billion and NOK 0.8 billion respectively. However, the change in the krone exchange rate has no effect on the Fund’s international purchasing power.

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