Norway SWF tops NOK3trn for first time

nordic_pierThe Norwegian sovereign wealth fund has reached NOK3trn (€368bn) for the first time in its 14-year history, on the back of increased equity investments in emerging markets and the surge in oil prices.

“The fund has grown faster and bigger than most people expected since getting its first inflow of capital in May 1996,” said Yngve Slyngstad, chief executive officer of Norges Bank Investment Management (NBIM), which manages the fund.

Since investing the initial 1.98bn kroner in the same way as the country’s foreign exchange reserves, the fund has expanded into international stock and bond markets and is currently planning its move into real estate. Its market value reached a record NOK3trn that is about $512bn. In another milestone, the fund first passed the $500bn mark in early October.

The market value is largely determined by inflows of capital, returns and fluctuations in the krone exchange rate. The fund had NOK2,379bn in capital inflow and NOK430bn in returns between May 1996 and 30 June 2010, while changes in the krone exchange rate reduced the market value by NOK3bn.

“A surge in oil prices since 2002 increased the size of capital inflows, which reached a record NOK384bn in 2008 before dropping in 2009 and 2010,” Slyngstad said. “Increased equity investments, particularly in emerging markets, also helped the fund’s growth.”

The fund boosted its share of equity investments to 60% from 40% between the summers of 2007 and 2009, reducing fixed-income investments to 40%. It got a mandate in March this year to invest as much as 5% of its assets in real estate through a corresponding decrease in fixed-income investments.

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