Norway’s sovereign wealth fund reports impressive US$ 223 billion (NOK 2.5 trillion) return for 2024

January 29, 2025 — In a remarkable display of financial resilience and strategic investment, the Government Pension Fund Global (GPFG), Norway's sovereign wealth fund, announced a 13 per cent return in 2024, which is equivalent to staggering US$ 223 billion.

In a press release issued today, Norges Bank Investment Management (NBIM), which manages the Norway's sovereign wealth fund, highlighted that the return reflects robust performance across global equities. The fund’s equity portfolio recorded an 18 per cent return. The Norway's sovereign wealth fund’s overall value has now approached a massive 19.7 trillion kroner (US$ 1.75 trillion), reinforcing Norway's position as a leader in wealth management and fiduciary responsibility.

Strategic asset allocation

As of the end of 2024, the GPFG maintains a diverse investment portfolio with 71.4% of its assets allocated to global equities, 26.6% to fixed income, and 1.8% to unlisted real estate. Within its equity portfolio, the Norway's sovereign wealth fund focuses on a geographically diversified strategy, with significant holdings in major stock markets around the world.

The GPFG also has significant holdings in various industry sectors, including technology, consumer goods and financials.

NVIDIA Investment

Norway’s sovereign wealth fund had invested nearly US$43 billion in NVIDIA as of 31 December 2024. NVIDIA was the third largest equity investment of Norway’s sovereign wealth fund as of 31 December 2024, after Apple and Microsoft.

Key investment locations

Norway's sovereign wealth fund’s allocation across various countries reflects its commitment to diversification and value creation. Based on the data from the GPFG, below are its notable diverse equity investment locations:

United States

The United States stands out as the largest recipient of equity investments from the GPFG. With around 40% of the fund's equity investments allocated to American companies, the U.S. serves as a cornerstone for the fund's equity portfolio. The reason for this extensive investment is multifaceted. The U.S. equity market is among the largest and most liquid in the world, offering diverse opportunities across technology, healthcare, finance, and consumer goods sectors. The presence of leading multinational corporations such as Apple, Microsoft, and Amazon not only provides potential for high returns but also contributes to technological advancement and innovation. The GPFG benefits from the stability, transparency, and regulatory robustness characterizing the U.S. market, making it a preferred destination for large institutional investments.

Japan

Japan ranks prominently on the GPFG’s investment landscape, with 4.6% equity investments, reflecting the fund's commitment to diversifying its portfolio into Asian markets. The Japanese market presents a unique combination of innovation and stability, making it an attractive proposition for Norway's sovereign wealth fund. Investments in technology, manufacturing, and consumer sectors, including firms like Toyota and Sony, align with the fund's long-term value approach. Moreover, investing in Japan allows the GPFG to tap into the growing economic dynamism of Asia while benefiting from Japan’s advanced infrastructure and technological prowess.

United Kingdom

The United Kingdom is another critical investment territory for the GPFG, accounting for 3.7 per cent of the fund’s equity investments. Like the U.S., the UK boasts a mature financial market with a rich history of stability. The fund’s allocation in the UK primarily focuses on sectors such as financial services, pharmaceuticals, and energy. Shell, AstraZeneca, HSBC, BP and Unilever are among the fund’s investments. British companies like Unilever and Diageo exemplify the fund's strategy to invest in diversified and well-established firms known for robust performance. Additionally, the GPFG capitalizes on the UK’s strategic position and its interconnectedness with European markets, even in a post-Brexit environment, where maintaining strong investment ties remains vital.

France

France represents another significant destination for the GPFG's investments, with 2.1 per cent of the fund’s equity investments. With a stable economy, France is home to numerous multinational corporations across various industries, including luxury goods, energy, and finance. LVMH Moet Hennessy Louis Vuitton, Schneider Electric, AXA, TotalEnergies and BNP Paribas are among the top investments of the fund in France. The social and political stability of France, combined with its position within the European Union, provides an additional layer of security for investments, appealing to the fund's long-term investment horizon.

Impact on the Norwegian economy

The impressive returns from the Norway's sovereign wealth fund will have wide-ranging implications for the Norwegian economy. As the country’s largest financial asset, the wealth fund plays a vital role in funding public services and social welfare programs. Norwegian citizens can expect to see the benefits of this financial success manifested in ongoing investment in critical infrastructure, healthcare, and education services.

Economic conditions favourable for investment growth

The return was attributed to several favourable economic conditions, including a resurgence in global markets post-pandemic, improved corporate earnings, and continued strength in the technology sector. CEO Nicolai Tangen of Norges Bank Investment Management commented on the results, stating, “The fund achieved very good returns in 2024, as a result of a very strong stock market. The American technology stocks in particular performed very well”.

Nicolai Tangen has been the Chief Executive Officer of Norges Bank Investment Management since September 2020.

Sustainability efforts paying off

In addition to financial gains, the GPFG has maintained a strong commitment to sustainable investment practices. The fund has significantly increased its investments in renewable energy and green technologies, aligning with global climate goals. As part of its commitment to responsible investment, GPFG has also expanded its investments in companies with exemplary environmental, social, and governance (ESG) practices, underscoring their dedication to securing a sustainable future.

The GPFG has invested in companies focused on energy storage and battery technology, reflecting its commitment to supporting the transition to a low-carbon economy. The fund's renewable energy investments include holdings in companies such as Vestas Wind Systems, Siemens Gamesa Renewable Energy, and Orsted A/S, which are driving innovation in the wind and solar sectors.

Fund’s background

The Norway's sovereign wealth fund is one of the largest and most successful investment funds in the world. Established in 1990 as a sovereign wealth fund, its primary objective is to manage Norway's oil and gas wealth on behalf of future generations, while generating returns to support the country's social and economic development.

One notable feature of the GPFG is that it invests solely outside of Norway. Today, the GPFG holds significant stakes in top companies worldwide, including tech giants, consumer brands, and energy players. This transformation was driven by increasing demand for diversification and the need to navigate global market volatility.

Size and structure

The GPFG has grown significantly over the past three decades, with its assets now standing at approximately 19.7 trillion kroner (around 1.75 trillion USD), making it one of the largest sovereign wealth funds in the World. Central Bank of Norway is responsible for managing this enormous fund. The Executive Board of the Central Bank has delegated the operational management of the fund to Norges Bank Investment Management.

Management style and principles

It is apparent that the GPFG's management approach is centered around a set of core principles, emphasizing long-term value creation, diversification, and risk management. The fund invests in a diversified portfolio of stocks, bonds, and real estate globally. This strategic allocation allows the fund to tap into various growth opportunities, mitigate risks, and capitalize on market trends.

One of the unique visible features of the GPFG is its commitment to environmental, social, and governance (ESG) factors in its investment decisions. It is apparent that the fund's responsible investment practices are guided by a set of clear guidelines and policies, ensuring that its investments align with Norway's values and contribute to sustainable development.

Impact on Norway and the World

The GPFG's impressive performance and responsible investment practices have significant implications for Norway's economy, society, and the global financial landscape. The fund's returns directly support public services, welfare programs, and infrastructure development in Norway, fostering economic growth and social stability.

Furthermore, the GPFG's commitment to ESG factors sets a precedent for responsible investment practices worldwide. By prioritizing long-term value creation and sustainability, the fund encourages other investors to adopt similar approaches, promoting a more environmentally and socially conscious investment culture.

Outlook

The outlook for Norway's sovereign wealth fund is generally positive, though not without its challenges. The fund benefits from Norway's strong economic position and the continued inflow of capital from its petroleum industry. This allows the fund to maintain a long-term investment horizon and to take on a certain level of risk in its pursuit of high returns. However, the fund's performance is heavily influenced by global market conditions, and it faces risks related to geopolitical instability, inflation, and fluctuations in currency exchange rates.

In terms of investment return, the GPFG aims to achieve the highest possible long-term return with an acceptable level of risk. Future returns are uncertain and will depend on a variety of factors, including the performance of global stock and bond markets, as well as the fund's ability to effectively manage its portfolio. The fund is also increasingly focusing on responsible investment practices, which may have an impact on its returns in the long run. Overall, while the GPFG is well-positioned for future growth, it is important to recognize that its investment returns are subject to market risks and uncertainties.

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