Record profit for Norway’s sovereign wealth fund in 2023

Norway’s mammoth sovereign wealth fund, the Government Pension Fund Global, reported a historic profit of 2.22 trillion kroner (approximately $213 billion) for the year 2023. This marks the fund’s highest-ever return in its native currency. The achievement is particularly noteworthy as it follows a substantial loss of 1.64 trillion kroner in 2022.

The fund, renowned as one of the globe’s most significant investors, registered a 16.1% return on investment in 2023. This figure is slightly lower than its benchmark index by 18 basis points.

The turnaround in fortunes can be attributed to the strong performance of technology stocks, which were a major contributor to the fund’s success.

Nicolai Tangen, the CEO of Norges Bank Investment Management, acknowledged the challenging market conditions, including high inflation and geopolitical unrest. He noted, however, that the equity market in 2023 was robust, contrasting sharply with the weaker performance in 2022.

Established in the 1990s, Norway’s sovereign wealth fund is the largest in the world. Its primary purpose is to manage the surplus revenues generated by the country’s oil and gas sector. Currently, the fund has investments in over 8,500 companies across 70 countries, with its value standing at 1.428 trillion US dollars as of 2023.

In a detailed breakdown of its investments, Norges Bank Investment Management revealed that equity investments yielded a return of 21.3%. Fixed-income investments saw a return of 6.1%, while unlisted real estate investments faced a downturn with a -12.4% return. The fund attributed the negative performance in real estate to rising interest rates and a decrease in demand.

Despite these challenges, the fund’s investments in unlisted renewable energy infrastructure yielded a positive return of 3.7% in 2023. This diversification in investment strategy underscores the fund’s adaptability and resilience in the face of fluctuating global market conditions.