The Norwegian sovereign wealth fund has again generated a profit in the billions in the first half of the year. Technology stocks delivered the highest returns for the world’s largest pension fund.
The Norwegian sovereign wealth fund made another billion-dollar profit in the first half of the year. After a record loss in the previous year, the plus added up to the equivalent of around 130 billion euros, as announced by the world’s largest sovereign wealth fund. The return was 10.0 percent and caused the value of the fund to rise to the enormous value of the equivalent of 1.3 trillion euros at the end of June.
Balanced high losses
In doing so, the fund almost recouped within six months the huge loss of 1.6 trillion kronor it had recorded last year due to Russia’s war of aggression in Ukraine and the deterioration in the global economy. The publication of the half-year figures was actually planned for today, but it accidentally happened yesterday evening.
Strong stock markets, which supported the fund, primarily led to the billions in profit. High-tech stocks posted the highest returns at 38.6 percent. “The sector benefited from strong demand for new artificial intelligence solutions from the largest internet and software companies and their semiconductor suppliers,” the fund said.
Weak krone ensures positive currency effect
However, the example of the Norwegian sovereign wealth fund also shows how important it is to take possible currency effects into account when making investments. A good part of the pension fund’s profit increase in the first half of the year can also be attributed to the weakness of the Norwegian krone.
Since the beginning of the year, the currency had lost significantly against the dollar – but also against the euro. This increased the value of investments in companies from the dollar and euro area.
Sovereign wealth fund owns 1.5 percent of all shares
Established in 1996, the sovereign wealth fund invests the income from the Norwegian oil and gas sector. Its task is to finance the expenses of the Norwegian welfare state for future generations. The Norwegian sovereign wealth fund has stakes in more than 9,300 companies worldwide and owns 1.5 percent of all listed shares.
In addition, the pension fund invests in bonds, real estate and recently also directly in wind and solar power plants. The fund is subject to strict guidelines, for example with regard to ethical issues, human rights and environmental protection.