Norway’s giant sovereign wealth fund, the world’s largest of its kind, announced a first-quarter profit of 1.21 trillion kroner ($110 billion) driven by strong returns on its investments in technology stocks. The Government Pension Fund Global, which manages surplus revenues from the country’s oil and gas sector, reported a value of 17.7 trillion kroner at the end of March. Despite weak results in real estate and unlisted renewable energy infrastructure investments, the fund experienced good returns on equity and fixed income investments to overall result for the quarter was 0.1 percentage point lower than the benchmark index.
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%. Deputy CEO of Norges Bank Investment Management, Trond Grande attributed these strong returns to market participants reassessing their outlook for companies such as Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia, and Tesla, known as the Magnificent Seven. He noted that while Nvidia continued to perform well, other companies like Tesla and Apple saw weakness due to changing consumer behavior towards sustainable living options over oil-dependent products. Grande emphasized that market participants are taking a more nuanced look at these companies and their business models in response to growing concerns about climate change and environmental degradation caused by fossil fuels use.
The Norwegian sovereign wealth fund has been investing surplus revenues from the oil and gas sector since its establishment in the 1990s with an objective to provide long-term financial stability for future generations through diversification across various asset classes worldwide. Despite seeing some negative results in certain sectors like real estate and renewable energy infrastructure investments during Q1 2023, Norges Bank Investment Management is optimistic about long-term opportunities for growth through continued investment in technology stocks and sustainable businesses that align with its objectives of sustainability and economic development for Norway’s future generations.
