Norway’s $1.7 trillion sovereign wealth fund, known for managing the country’s oil and gas revenue, reported an 8.6% return, or $138 billion, in the first half of 2023, Bloomberg reports, adding that the strong performance was driven by a surge in global stock markets.
Norges Bank Investment Management (NBIM), which handles the fund, saw its equity investments gain 12% in the six months ending June, according to a statement released Wednesday. However, the fund slightly underperformed its benchmark by 0.04 percentage points, with real estate investments continuing to drag on returns.
Created in the 1990s to invest Norway’s oil and gas revenues abroad, the fund is the world’s biggest single owner of equities. It 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 bulk of NBIM’s capital is in publicly listed equities.
“Equity investments gave a very strong return in the first half of the year,” Chief Executive Officer Nicolai Tangen said Wednesday. “The result was mainly driven by the technology stocks, due to increased demand for new solutions in artificial intelligence.”
Fixed-income investments were down 1%, as was the value of unlisted real estate holdings. Unlisted renewable energy infrastructure dropped 18%, the fund said. The fund has a higher share of short-maturity bonds than the benchmark index, which contributed positively, it said.
After gaining in the first half, global stock markets have dipped in recent weeks and remain on edge. The outlook for Federal Reserve interest-rate cuts, as well as lukewarm results from tech giants such as Amazon.com, Microsoft Corp and Alphabet Inc have fed the volatility.
NBIM said yesterday that it pared its stakes in Meta Platforms Inc., Novo Nordisk A/S and ASML Holding NV — all among its top 10 holdings — during the first half of the year.
The fund has traditionally given an annual update on the contents of its portfolio, but will do so twice a year going forward, Tangen said. Apple Inc., Microsoft Corp. and Nvidia Corp. were its three biggest equity investments in late June.
As a major investor with stakes in over 8,800 companies globally, NBIM has been increasingly vocal in using its influence to advocate for change. This includes pushing for improvements in areas like climate change mitigation, gender diversity on corporate boards, and executive compensation practices.
