Posted Apr 25, 2022, 12:22 PMUpdated on Apr 25, 2022, 5:05 PM
The outlook could hardly be worse for pension funds and sovereign wealth funds. Nothing complicates the management implemented by these large investors as much as stagflation (a combination of economic stagnation and inflation). In this environment, the two main asset classes in which they are invested – equities and bonds – are falling simultaneously. They therefore have no way out or appropriate diversification strategy.
Caught up by the war in Ukraine, the global economic slowdown and rising rates, the largest sovereign wealth fund in the world, that of Norway, lost 4.9% in the first quarter, or 67.5 billion euros. In other words, in just three months, he has already lost 43% of his 2021 earnings (157 billion euros). The decline continued in April, with a 2.8% decline in its capital under management, which stood at 1.168 billion euros. Since the beginning of the year, its assets have fallen by 8.2%.