Barely – Norway’s Sovereign Wealth Fund Outperforms Future Fund for First Quarter 2014

Despite being heavily diversified in many asset classes, Australia’s Future Fund was beat by Norway’s sovereign wealth fund according to first quarter calendar results for 2014. The Future Fund generated first quarter returns of 1.1%, while Norway’s sovereign wealth fund returned 1.7%.

Sovereign wealth funds and large public pensions tend to be long-term investors.

The Future Fund’s return for the financial year to March 31, 2014 was 9.8%. The Future Fund increased allocation to emerging markets and has allocations to infrastructure and private equity. Allocation to alternative investments like private equity, hedge funds, real estate and infrastructure typically create higher investment expenses for public investors like sovereign wealth funds.

To be fair, comparing the 2013 calendar returns, the Future Fund posted 17.2% vs Norway’s 2013 annual return of 15.9%.

Norway GPFG 1st Quarter 2014 Returns

  • Fixed Income – 2%
  • Equity – 1.5%
  • Real Estate – 2%

41 billion NOK of new capital was transferred to the GPFG from the Norwegian government.

Sovereign wealth funds and large public pensions tend to be long-term investors. Monthly and quarterly performance numbers typically are of less importance to board members than annual or multi-year returns.

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