(Bloomberg) -- Norway’s $1.6 trillion sovereign wealth fund fell short of its benchmark in the first quarter, extending an underperformance seen in the final months of last year.

Norges Bank Investment Management, which manages Norway’s fossil wealth, returned 6.3%, or $110 billion, it said in a statement on Thursday. That’s down from a 7.9% return in the final quarter of last year.

The fund, largely an index tracker, gained 9.1% on stocks and lost 0.4% on its fixed-income investments. It came up short against the benchmark by 0.1 percentage point in the quarter, driven by “weak results” from real estate.

“The surprise this year has been, at least in the first quarter, the continuation of this bull market but at the same time rates going up again,” Trond Grande, deputy chief executive officer, said in a Bloomberg TV interview. Investors will be looking to the forthcoming earnings season and whether earnings “hold up to expectations,” he said.

Global stock markets climbed in the first three months of the year across industries, with the exception of real estate, but persistent price pressures have weighed on markets in recent weeks. NBIM CEO Nicolai Tangen told Bloomberg last week that inflationary factors ranging from rising commodity costs to wage increases will continue to dog global economies.

Read More: Norway Wealth Fund Head Says Rate Cut Pace to Disappoint Market

NBIM invests according to a strict mandate from the Finance Ministry, measuring itself against a benchmark index based on the FTSE Global All Cap Index for equities and Bloomberg Barclays indexes for fixed income.

The so-called magnificent seven tech stocks account for some 14% of holdings, Grande said, adding that it is a “huge concentration” for a fund focused on diversifying risk.

“There’s a lot of merit to the enthusiasm surrounding AI, certainly in the hardware space,” the executive said. “It’s still to be proven how you can monetize it also in the software space, but of course there’s a lot of gains priced into the stocks of Microsoft and Meta on the basis of this. So we’re just staying a little bit careful.”

The fund lost 0.5% on its unlisted real estate holdings and 11.4% on unlisted renewable-energy infrastructure.

“It’s has been a tough 24, 36 months even, but our opinion is that these investments are looking increasingly attractive,” Grande said regarding real estate. “We will be in a position to actually pick up potentially some good investments in this market environment even now or going forward a couple years.”

The government deposited 96 billion kroner ($8.7 billion) into the fund during the quarter.

(Updates with deputy CEO comments starting in fourth paragraph.)

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