Norway’s 20 trillion kroner wealth fund loses 1.9% due to tech stocks slide

[OSLO] Norway’s wealth fund lost 1.9 per cent in the first quarter, dragged down by investments in US technology stocks as the war in the Middle East rattled markets.

The value of the fund, managed by Norges Bank Investment Management (NBIM), fell by 1.27 trillion Norwegian kroner (S$173.8 billion), based on a statement on Thursday (Apr 23).

It is the first decline for the fund in four quarters, with a drop at the start of last year also led by shares of the IT giants.

“The result reflects a quarter with challenging market conditions,” said deputy chief executive officer Trond Grande.

“We (experienced) limited (effects) on fixed income and real estate, but it was the decline in equities, especially among large US technology companies, (which) determined the outcome.”

The world’s largest sovereign investor beat the benchmark it measures itself against by one basis point. The bulk of the fund is in equities, which lost 2.6 per cent.

Its second-biggest asset class, fixed income, fell by 0.2 per cent, while unlisted real estate returned 1.2 per cent and unlisted renewable energy infrastructure lost 1.9 per cent.

The war in the Middle East that broke out in February caused market volatility, but Q1 figures are not reflecting the market upturn that has taken hold after the first ceasefire deal on Apr 7.

Part of the decline in the fund’s value was caused by an appreciation of Norway’s krone.

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The krone was the strongest performer in the Group of Ten of major currency holders in the first quarter, with a 4.1 per cent gain against the US dollar and a 5.8 per cent advance against the euro, based on data compiled by Bloomberg.

The fund, created in the 1990s to invest Norway’s oil and gas revenues, has in past years seen cumulative returns from its investments exceed fossil fuel-linked deposits by the government.

It has had poor results from real estate for some time, which led the fund to revamp its real estate strategy last year.

As with many other large investors, Big Tech has in recent quarters dominated the fund’s performance. NBIM’s largest holdings include Apple, Microsoft, Alphabet, Amazon and Nvidia.

The fund holds about 1.5 per cent of all listed shares globally, corresponding to about 7,200 companies, and closely tracks global stock markets.

It follows a benchmark index set by the finance ministry and has limited scope for active investing.

On equities, it tracks the FTSE Global All Cap Index, while the fixed-income portion of the fund follows Bloomberg Barclays indices, with 70 per cent allocated to government bonds and 30 per cent to corporate securities.

Stocks make up roughly 70 per cent of the portfolio, bonds about 28 per cent, and unlisted properties and green-energy assets the remainder.

In the first quarter, inflows into the fund were 13 billion kroner after management costs, NBIM said, adding that the total value of the fund was about 20 trillion kroner as at end-March. BLOOMBERG