GPFG Returns 16.1%

Posted on 01/30/2024

Norway has announced that in 2023, the Norway Government Pension Fund Global returned 16.1%, equivalent to 2,222 billion kroner. The return on the fund’s equity investments was a staggering 21.3%, the return on the fixed income investments was a respectable 6.1%. Renewable projects brought in 3.7%. However, the fund faltered significantly in the area of unlisted real estate. This resulted in a loss, -12.4%. The fund’s return was 18 basis points lower than the return on the benchmark index.

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

The kroner depreciated against several currencies during the year, resulting in an increase in the fund’s value of 409 billion kroner. The oil fund had a value of 15,765 billion kroner as of 31 December 2023. 70.9% of the fund was invested in equities, 27.1% in fixed income, 1.9% in unlisted real estate, and 0.1% in unlisted renewable energy infrastructure. Given the sovereign wealth fund had a 70.9% allocation to listed equities, the returns are highly correlated to the performance of U.S. technology stocks. The sovereign fund returned -14% in 2023. The wealth fund struggles in its unlisted real estate allocation, which lost -12% in 2023 – an asset class that is not mark-to-market. In addition, Norway Government Pension Fund Global is heavily exposed to office real estate.

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