Norwegian Sovereign Wealth Fund Reports Record $213 Billion Profit in 2023, Bouncing Back from Previous Losses

Norway's sovereign wealth fund, the Government Pension Fund Global (GPFG), celebrated a significant financial milestone as it reported a record-breaking profit of 2.22 trillion Norwegian crowns (approximately $213 billion) for the year 2023. This impressive achievement marked a stark contrast to the previous year when the fund incurred a substantial loss of 1.64 trillion crowns in 2022, as disclosed by Norges Bank Investment Management (NBIM).

The notable turnaround in GPFG's fortunes can be attributed to robust returns on its investments, especially in the technology sector. Despite facing challenges like high inflation and geopolitical uncertainties, the equity market in 2023 proved remarkably resilient and strong, unlike the preceding year.

Technology stocks played a pivotal role in GPFG's stellar performance, with Microsoft leading the way with shares worth 358.4 billion crowns, closely followed by Apple, accounting for 337.3 billion crowns. The fund's return on investment for the year 2023 stood at an impressive 16.1%, marking a minor 0.18 percentage point dip from the fund's benchmark index return.

The Government Pension Fund Global, with assets totaling a staggering $1.6 trillion, aims to invest revenues generated from Norway's oil and gas production into a diversified global portfolio encompassing equities, bonds, property, and renewable projects. With holdings in over 8,800 global companies, it commands a substantial 1.5% ownership of all listed stocks, solidifying its status as the world's largest sovereign wealth fund.

In terms of asset allocation, equities accounted for 70.9% of GPFG's holdings by the end of 2023, up from 69.8% in the previous year. Bonds saw a slight decrease from 27.5% to 27.1%. Unlisted real estate declined 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, 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.

Source: London Insider