Boosted by tech stocks, Norway wealth fund earns $123 billion in 2020

Norway’s $1.3-trillion sovereign wealth fund, the world’s largest, earned a return on investment of 1.07 trillion Norwegian crowns ($122.7 billion) in 2020, the second highest in its 25-year history, it said on Thursday, January 28.

“Despite the pandemic having put its mark on 2020, it has been yet another good year for the fund,” Central Bank Governor Oeystein Olsen said in a statement. The fund is managed by a unit of the central bank.

“However, the high return also reminds us that the market value of the fund might vary a lot going forward,” he said.

The return on investment was 10.9% last year, 0.27 percentage points higher than the return on the fund’s benchmark index.

The fund’s results were boosted by United States tech stocks, with Apple, Amazon, Microsoft, and Tesla contributing the most to its absolute return, presentation material showed.

“Technology companies had the highest return in 2020, with a return of 41.9%,” fund chief executive officer Nicolai Tangen said in a statement.

“This is mainly due to the pandemic resulting in a massive increase in the demand for products for online working, education, trade, and entertainment.”

On a country basis, the United States contributed the most, by far, to the fund’s return, with more than 500 billion crowns, followed by China with more than 100 billion crowns, presentation material showed.

Investments in Britain lost the fund 70 billion crowns.

Founded in 1996, the Norwegian fund holds stakes in around 9,200 companies globally, owning 1.5% of all listed stocks. It also invests in bonds and unlisted real estate.

The fund holds the equivalent of $240,000 for every Norwegian man, woman, and child.

At the end of the year, 72.8% of the fund’s investments were in stocks, 24.7% in bonds, and 2.5% in unlisted real estate, it said. – Rappler.com