Norway sovereign wealth fund hits record profit in 2023

Norway’s sovereign wealth fund, the world’s biggest, said Tuesday it raked in a record profit of 2.2 trillion kroner ($213 billion) last year, driven largely by US tech stocks.

The 16.1 percent return on investments followed a huge loss in 2022 and took the fund’s total value to 15.8 trillion kroner last year.

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Nicolai Tangen, the chief executive of Norges Bank Investment Management, said the equity market was “very strong” in 2023 despite high inflation and “geopolitical turmoil”.

“I think it’s fair to say that 2023 ended up a lot better than what we had expected a year ago,” Tangen said at a press conference.

The fund’s tech stocks gained 50 percent, accounting for 895 million kroner of the total profit, as the sector was boosted by enthusiasm around artificial intelligence and hopes that central banks will soon cut interest rates.

The biggest contributions came from the “Magnificent Seven” stocks: Apple, Amazon, Alphabet (Google’s owner), Meta (Facebook and Instagram owner), Microsoft, Nvidia and Tesla.

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Fuelled by revenues from Norway’s state-owned oil and gas companies, the fund is aimed at financing future spending in the generous welfare state.

Around 71 percent of its portfolio was dedicated to equities, with stakes in 8,859 companies worldwide — or 1.5 percent of all listed stocks.

The return on its equity investments last year was 21.3 percent.

Its investment in tech shares has grown, accounting for 22.3 percent of its total equity investments last year compared to 14.5 percent in 2019.

The return on its bond holdings was 6.1 percent while real estate investments fell 12.4 percent amid higher interest rates.

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The fund also invests in unlisted renewable energy projects, which generated a return of 3.7 percent.

The decrease in the value of the kroner contributed to an increase in the fund’s value of 409 billion kroner.

Tangen warned, however, that such strong performances cannot last in the future amid geopolitical risks such as the Middle East conflict, which is disrupting maritime traffic in the Red Sea, and US-China trade tensions.

“Of course the most scary geopolitical situations are the ones that you don’t know about, which haven’t happened yet,” he said.

© Agence France-Presse