Norway’s colossal sovereign wealth fund, boasting a staggering $1.6 trillion in assets, and renowned as the world’s largest of its kind, recently made headlines by revealing a remarkable record-breaking profit.
The fund, officially known as the Government Pension Fund Global (GPFG), disclosed a staggering profit of 2.22 trillion Norwegian crowns (equivalent to $213 billion) for the year 2023.
This impressive financial achievement marked a stark contrast to the previous year when the fund incurred a record loss of 1.64 trillion crowns in 2022, as reported by Norges Bank Investment Management (NBIM) on Tuesday.
The noteworthy turnaround in GPFG’s fortunes can be attributed to robust returns on its investments, particularly in the technology sector.
Despite facing challenges such as high inflation and geopolitical uncertainties, the equity market in 2023 proved remarkably resilient and strong, unlike the preceding year.
Technology stocks, in particular, shone brightly in GPFG’s portfolio, substantially contributing to its stellar performance, as affirmed by NBIM’s Chief Executive, Nicolai Tangen, in an official statement.
Among the fund’s most valuable company holdings, Microsoft stood tall, with shares worth 358.4 billion crowns, closely trailed by Apple, which accounted for 337.3 billion crowns.
GPFG’s return on investment for the year 2023 stood at an impressive 16.1%, a minor 0.18 percentage point dip from the fund’s benchmark index return.
The purpose of Norway’s sovereign wealth fund is to invest the revenues generated from the nation’s oil and gas production into a diversified portfolio, encompassing equities, bonds, property, and renewable projects worldwide.
With holdings in over 8,800 global companies, it commands a substantial 1.5% ownership of all listed stocks, further solidifying its status as the world’s largest sovereign wealth fund.
In terms of asset allocation, 70.9% of GPFG’s holdings were allocated to equities by the end of 2023, up from 69.8% in the previous year.
Bonds, on the other hand, saw a slight decrease, declining from 27.5% to 27.1%. Unlisted real estate fell to 1.9% from 2.7%, while renewable infrastructure remained steady at 0.1% of the fund’s investments.
Despite the remarkable inflow of 711 billion crowns from the Norwegian state into the fund in 2023, it fell short of the record set in 2022, which was nearly 1.1 trillion crowns.
Norway, a prominent crude oil exporter and Europe’s leading gas supplier, has experienced favorable economic conditions due to reduced Russian gas flows in 2022 and the positive impact of heightened energy prices linked to the war in Ukraine.