Norway’s Fund Lost 2% on Government Bonds Amid Japanese Slump

Norway’s sovereign wealth fund, the world’s largest, said it lost 2 percent on its government bond holdings in the second quarter as the value of its Japanese securities and inflation-linked debt declined.

“The rise in yields meant that most fixed-income sectors produced a negative return for the quarter,” the fund said in a statement today. “Uncertainty in fixed-income markets also increased.”

The $760 billion Government Pension Fund Global said its Treasuries lost 1 percent in the period, while Japan’s government bonds slumped 5.9 percent. Inflation-linked securities dropped 3.4 percent, while euro-denominated debt returned 1.6 percent, it said.

The wealth fund said government bonds made up 60.9 percent of its fixed-income investments at the end of the quarter.

“The fund increased its investments in government bonds from Japan, the U.S. and Brazil in the quarter,” the Oslo-based investor said in its statement. It “reduced its holdings of government debt from France, the U.K. and Australia,” it said.

The wealth fund also invested in securities issued by the European Financial Stability Facility, it said.

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