Norway’s Sovereign Wealth Fund Has its Best Quarter Ever

Posted on 05/03/2019

The enormous Norway Government Pension Fund Global (GPFG) generated a 9.1% return for the first quarter of 2019. The amount generated in return was 738 billion NOK. Equity investments returned 12.2% for the quarter for the sovereign investor, while unlisted real estate returned 1.7%, and fixed-income investments 2.9%. The overall return on the fund was 0.2 percentage points higher than the return on the benchmark index.

Norway’s GPFG bet big on technology stocks, buying positions in 2018 when they were battered down in market capitalization. The oil wealth fund’s investments in technology companies saw the highest returns with 17.6%. North American equities generated 14.6% in returns and was 41.4% of the equity portfolio. Emerging markets returned 12.3% and accounted for 11.3% of the equity portfolio for the wealth fund.

The wealth fund was an investor in 18 initial public offerings in the quarter, including car app company Lyft Inc, followed by consumer goods company Levi Strauss & Co, and health care company CStone Pharmaceuticals Co Ltd.

Norway Sovereign Wealth Fund – Top Equity Holdings as of March 31, 2019

Company Country Millions of kroner
Apple Inc United States 76,055
Microsoft Corp United States 75,801
Alphabet Inc United States 65,883 Inc United States 65,194
Nestlé SA Switzerland 63,788
Royal Dutch Shell PLC United Kingdom 51,891
Roche Holding AG Switzerland 44,760
Novartis AG Switzerland 44,551
Facebook Inc United States 36,381
Berkshire Hathaway Inc United States 34,839

“This is the fund’s best quarterly return measured in kroner ever. As a major equity investor we must be prepared for large fluctuations in the fund’s market value in line with developments in global stock markets,” says Yngve Slyngstad, CEO of Norges Bank Investment Management, according to a press release.

Base fees to external fund managers for the first quarter of 2019 fell to 183,000,000 NOK versus 247,000,000 NOK in the first quarter of 2018.

The wealth fund had a market value of 8,938 billion NOK as at March 31, 2019 and was invested 69.2% in equities, 2.8% in unlisted real estate, and 28% percent in fixed income.