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The Troll A gas platform run by the Norwegian oil giant Statoil company, standing above the North Sea, about 70 kilometers off the coast of Norway, in this photo dated June 8, 2006.


Sticking to a financial plan can be challenging, even if you are the world's largest sovereign wealth fund.

Or, so it seems, sometimes, for Norway's Government Pension Fund Global and the handful of active traders at Norges Bank Investment Management -- challenged during the first two weeks of August to explain the loss of 200 billion kroner ($372-million U.S.) in equity value, as much as its stock losses for all of the second-quarter.

"It happened very fast," fund director Ygve Slyngstad said as he delivered Q2 numbers. There's no comment yet on August's losses.

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Part of the fund's plan -- invest 5 per cent or 150 billion kroner in real estate as soon as practicable -- has, like Spanish debt, already become a test of nerve for Mr. Slyngstad and his handlers at the Norwegian Finance Ministry. This month, they put 245 million kroner into No. 1 Maddox Street and No. 4 Conduit Street, a couple of pricey ($24,000 per sq. m) London pedestrian malls.

Soon after the buy-in with partner The Crown Estate, rioters swept through City districts to burn and pillage historic commercial buildings. Nothing, it seemed, was safe for sovereign wealth.

The fund had only just (in July) spent 5.5 billion kroner on real estate by the Eiffel Tower and, in late 2010, threw down 4.2 billion kroner for 20 per cent in Regent Street commercial rents. With a second, third (or perhaps still the first) financial crisis developing, a rush was on into property offering fixed income.

Just as August, 2008, marked the three-trillion-kroner fund's worst year -- a year-long, 50 billion kroner plunge -- so too has August, 2011, gouged away value, although 53 billion kroner from state interests in oil fields will top the fund up again. Optimistically called a pension fund by Oslo, the sovereign fund is still "The Oil Fund" to ordinary Norwegians and rival to increasingly bold Canadian pension funds buying up English ports and property.

Kept away from bargain U.S. real estate by Washington's rules on foreign ownership, the oil fund is keen to anchor in asphalt (still just 0.1 per cent) or other fixed income (39 per cent) its massive long-term equity holdings (60 per cent). Though the preserve of "future generations", all that value this quarter has earned just a 0.3 per cent (4 billion kroner) return for the national budget.

Look for more European property "sprees" from NBIM. The Fund's much-touted moral oversight board publicly frowns on hard-times havens like shares in Big Tobacco.

Despite the paltry return (Q1 was 2.1 per cent), Norwegians aim to preserve their 625,000 kroner per-capita oil-fund fortune (their worth in impending oil field production is twice that). In contrast, the per-person debt of Americans this week reached minus $43,000.

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Still, with their battered share holdings worldwide -- banks in Europe, industry in Japan -- Norwegians perceive the national heritage to be under threat.

"Unrest in the financial markets" is why Finance Minister Sigbjoern Johnsen convened a meeting of finance heads this week and issued the assurance, "Investors like the state's pension fund which tolerate the type of unrest in finance markets that we're now seeing can expect to be rewarded with higher returns over time."

Like Mr. Slyngstad, his fund manager, Mr. Johnsen warned of "significant swings" to come, but sees August as a time for buying. As under the finance crisis of 2008, the fund is again understood to be trading about 500 million kroner a day in shares.

"We have to look at this unrest as buyer opportunity," said Mr. Slyngstad. Apart from shares, the fund has been purchasing this month 400 million kroner a day in foreign currencies.

Such active trading is continuing, but for now is being eclipsed by fixed-income values in the fund that rose quarter-to-quarter by 100 billion kroner. Still better is earning 4.75 per cent on 1 billion kroner for being the Queen's 20-per cent partner and co-landlord.

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