In the first quarter, Norway’s sovereign wealth fund reported a profit of 1.21 trillion kroner ($110 billion), driven by strong returns on its investments in technology stocks. The Government Pension Fund Global, the world’s largest sovereign wealth fund, ended the quarter with a value of 17.7 trillion kroner. Despite good returns on equity and fixed income investments, the fund experienced weak results in real estate leading to an overall negative result for the quarter.
Equity investments returned 9.1%, while fixed income investments had a yield of -0.4%, and unlisted real estate investments returned -0.5%. The unlisted renewable energy infrastructure investments had a return of -11.4%. Despite strong returns, the fund’s overall return was 0.1 percentage point lower than the benchmark index. Established in the 1990s, Norway’s sovereign wealth fund invests surplus revenues from the country’s oil and gas sector in companies worldwide.
According to Deputy CEO Trond Grande of Norges Bank Investment Management, the strong first-quarter return was due to the tech sector’s performance. He mentioned that market participants are reassessing their outlook for companies such as Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia, and Tesla – collectively known as the Magnificent Seven. Grande noted that while Nvidia continued to perform well, other companies like Tesla and Apple saw weakness. He highlighted that the market is taking a more nuanced look at these companies and their business models.
In conclusion, while Norway’s sovereign wealth fund experienced weak results in real estate investments in Q1 2023, its equity and fixed income investments performed strongly due to tech stocks’ impressive returns. Despite this success story, it is worth noting that despite strong returns on equity and fixed income investments, unlisted real estate investments were still down by 0.5%. Additionally, renewable energy infrastructure also underperformed with an -11% return.
Overall, despite achieving solid returns in Q1 2023 due to its diversified portfolio of global companies across multiple sectors and asset classes