Norway $1.6 trillion wealth fund in record $213bn profit

Norway’s $1.6 trillion sovereign wealth fund — the largest in the world — has reported a record profit of 2.22 trillion crowns ($213 billion) for 2023, driven by strong returns on its investments in technology stocks.

The results compared with a record loss in 2022 of 1.64 trillion crowns, when tech stocks fell.

At the end of 2023, 70.9% of the fund’s assets were allocated to equities, up from 69.8% in 2022, while bond investments declined to 27.1% from 27.5%.

“Despite high inflation and geopolitical turmoil, the equity market in 2023 was very strong, compared to a weak year in 2022,” said CEO Nicolai Tangen of Norges Bank Investment Management.

“Technology stocks in particular performed very well.”

The fund said technology shares contributed about half of its return, driven by a business breakthrough for artificial intelligence, an improvement in the general economic outlook and expectations for lower interest rates.

The fund’s most valuable company stakes were in Microsoft, Apple and Nvidia. The most valuable non-tech stock in its portfolio was pharmaceutical company Novo Nordisk.

Inflows from the Norwegian state into the fund in 2023 were 711 billion crowns, the second largest in the fund’s history.

The fund said: “In 2023, the Government Pension Fund Global returned 16.1 percent, equivalent to 2,222 billion kroner.

“The return on the fund’s equity investments was 21.3 percent, the return on the fixed income investments was 6.1 percent, whereas investments in unlisted real estate returned -12.4 percent.

“The return on unlisted renewable energy infrastructure was 3.7 percent.

“The fund’s return was 18 basis points lower than the return on the benchmark index …

“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 409 billion kroner. Inflow into the fund amounted to 711 billion kroner.

“The fund had a value of 15,765 billion kroner as of 31 December 2023. 70.9 percent of the fund was invested in equities, 27.1 percent in fixed income, 1.9 percent in unlisted real estate, and 0.1 percent in unlisted renewable energy infrastructure.”