Oslo - The fund that invests income from Norway's petroleum and gas riches for future pensions reported its "weakest result" to date when it published its full-year
2008 results on Wednesday.

The return on the fund during 2008 fell by 23 per cent - equalling 633 billion kroner (89 billion dollars) - measured in international currency, the Norwegian central bank said.

"2008 was an extraordinary year in the world's financial markets," Yngve Slyngstad, head of the central bank's investment management group told reporters.

"In the stock markets we saw big losses and extreme volatility," he said. While reluctant to comment on 2009, he concluded that "great uncertainty" remains over how the financial crisis will evolve.

The central bank said the return on the fund was 3.4 percentage points weaker than the Finance Minstry's benchmark portfolio.

A higher stake of shares compared to bonds - part of the fund's investment policy - contributed to the increased volatility, Slyngstad said, adding that the drop was worse than in the 1930s.

The fund, officially named the Norwegian Government Pension Fund - Global, was worth 2,275 billion kroner (322 billion dollars) at the end of 2008, compared to 2,019 billion kroner at the end of 2007.

During 2008, 384 billion kroner was transferred to the fund.

"The financial crisis has revealed weaknesses in our active management," central bank governor Svein Gjedrem said, adding that a review was due. However, he defended the policy to invest in shares.

Gjedrem said Slyngstad had requested that his salary be lowered in 2009. He said the reduction of some 2 million kroner to 3.5 million kroner reflected the trend in international asset management.

At the end of 2008, the fund was estimated to own shares in some 7,700 companies, totalling a 0.77 per cent ownership stake in global equity markets.

The fund, managed by the central bank, was created to pay for Norway's future health and pension expenditure through investments outside the Norwegian economy.

The capital is invested in bonds, shares, money market instruments and derivatives. (dpa)