World 2nd Largest Sovereign Wealth Fund of Norway Reports Portfolio Returns of -14.1% in 2022, $165 Billion Losses with $1.25 Trillion Assets
2nd February 2023 | Hong Kong
The world 2nd largest sovereign wealth fund Norway Government Pension Fund Global has reported a -14.1% returns (performed 0.88% better than benchmark) in 2022, with $165 billion of losses and $1.25 trillion of total assets. Equity generated -15.3%, fixed income generated -12.1%, unlisted real estate generated -0.1% and unlisted renewable energy infrastructure generated 5.1%. Of the $1.25 trillion portfolio, 69.8% are in equities, 27.5% are in fixed income, 2.7% are in unlisted real estate and 0.1% are in unlisted renewable energy infrastructure.
“ World 2nd Largest Sovereign Wealth Fund of Norway Reports Portfolio Returns of -14.1% in 2022, $165 Billion Losses with $1.25 Trillion Assets “
CEO of Norges Bank Investment Management Nicolai Tangen: “The market was impacted by war in Europe, high inflation, and rising interest rates. This negatively impacted both the equity market and bond market at the same time, which is very unusual. All the sectors in the equity market had negative returns, with the exception of energy
Norges Bank Investment Management: “The krone depreciated against several of the main currencies during the year. The currency movements contributed to an increase in the fund’s value of 642 billion kroner. Inflow into the fund amounted to 1,085 billion kroner.”
CEO of Norges Bank Investment Management Nicolai Tangen
Nicolai Tangen is responsible for the management of the Government Pension Fund Global. This includes the daily operation and the development of Norges Bank Investment Management.
Tangen joined Norges Bank Investment Management as Chief Executive Officer on 1 September 2020. Tangen was previously Chief Executive Officer and Chief Investment Officer in AKO Capital, which he founded in 2005. He also set up the AKO Foundation in 2013, which supports charitable initiatives to improve education, promote the arts and mitigate climate problems. Prior to this, Tangen was a partner and senior analyst at Egerton Capital and an equity analyst at Cazenove & Co. Tangen holds a Bachelor’s Degree in finance from the Wharton School and Master’s Degrees in the History of Art from the Courtauld Institute of Art and in Social Psychology from the London School of Economics. He has also studied Russian at the Norwegian Armed Forces’ School of Intelligence and Security.
Norges Bank Investment Management
We are responsible for the operational management of the oil fund. Our objective is the highest possible return on the fund. We aim to achieve this in a safe, efficient, responsible and transparent manner, and within government guidelines. The fund is invested worldwide and so we are an international organisation with a global outlook.
Norway Government Pension Fund Global
Norway’s oil fund, or the Government Pension Fund Global which is its official name, was created after we discovered oil in the North Sea. The fund was set up to shield the economy from ups and downs in oil revenue. It also serves as a financial reserve and as a long-term savings plan so that both current and future generations get to benefit from our oil wealth.
In 1969, one of the world’s largest offshore oilfields was discovered off Norway. Suddenly we had a lot of oil to sell, and the country’s economy grew dramatically. It was decided early on that revenue from oil and gas should be used cautiously in order to avoid imbalances in the economy. In 1990, the Norwegian parliament passed legislation to support this, creating what is now the Government Pension Fund Global, and the first money was deposited in the fund in 1996. As the name suggests, it was decided that the fund should only be invested abroad. Oil revenue has been very important for Norway, but one day the oil will run out. The aim of the fund is to ensure that we use this money responsibly, think long-term and so safeguard the future of the Norwegian economy.
Although revenue from oil and gas production is transferred to the fund, these deposits account for less than half the value of the fund. Most of it has been earned by investing in equities, fixed income, real estate and renewable energy infrastructure.
The fund is now one of the world’s largest funds, owning almost 1.5 percent of all shares in the world’s listed companies. This means that we have holdings in around 9,000 companies worldwide, entitling us to a small share of their profits each year. In addition, the fund owns hundreds of buildings in some of the world’s leading cities, which generate rental income for us. The fund also receives a steady flow of income from lending to countries and companies. By spreading our investments widely, we reduce the risk of the fund losing money.
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