Norway’s sovereign wealth fund, the largest in the world, has made headlines with its remarkable performance in 2024, reporting a record profit of 2.51 trillion kroner (approximately $222 billion).
This achievement marks a significant milestone for the Government Pension Fund Global (GPFG), which is managed by Norges Bank Investment Management (NBIM).
The fund’s success is largely attributed to a booming technology sector, particularly strong gains from American tech stocks. A Year of Unprecedented Gains
The fund’s return on investment reached 13% for the year, which, while impressive, fell short of its benchmark index by 0.45 percentage points. Nicolai Tangen, CEO of NBIM, emphasized the crucial role that technology stocks played in this success.
“The American technology stocks in particular performed very well,” he stated, highlighting that these investments were the primary drivers behind the fund’s record profits.
Equity investments saw a robust return of 18%, while fixed income investments yielded a modest 1%. However, not all sectors fared as well; unlisted real estate and renewable energy infrastructure returned –1% and –10%, respectively.
Despite these mixed results across different asset classes, the overall performance solidified the fund’s position as a key player in global finance. The Fund’s Growing Value
By the end of 2024, the total value of Norway’s sovereign wealth fund reached approximately 19.7 trillion kroner (around $1.75 trillion).
This growth was further bolstered by a depreciation of the Norwegian krone against major currencies, which added an additional 1.1 trillion kroner to the fund’s value.
The fund has consistently been a major investor on the global stage, owning about 1.5% of all listed stocks worldwide. As of late 2024, nine out of its ten largest equity holdings were technology companies, with giants like Apple, Microsoft, and Nvidia leading the pack. Caution Amid Success
While celebrating this record profit, Tangen expressed caution regarding future market conditions. He noted that while the tech boom has significantly benefited the fund, there are uncertainties ahead.
“We have had a slight underweight in large technology firms… I think [the recent market movements] surprised everyone,” he remarked, referring to fluctuations caused by emerging competitors in the AI sector.
Inflows from the Norwegian state into the fund totaled 402 billion kroner in 2024, falling short of the nearly 1.1 trillion kroner record set in 2022. This indicates that while profits soared, contributions to the fund were not at their peak levels.
As Norway’s sovereign wealth fund continues to navigate through a dynamic investment landscape, its record-breaking profit serves as both an accomplishment and a reminder of the volatility inherent in global markets.
With technology at the forefront of its investment strategy, stakeholders will be keenly watching how this sector evolves and what it means for future returns.