OSLO (Aug 22): Norway’s sovereign wealth fund, the world’s largest, reaped a record 499 billion Norwegian crowns (US$63 billion) from its investments in the first half of the year on the back of rising stock markets, it said on Tuesday.
The fund, which generated a return of 6.5% on its global assets in the first six months of the year, invests revenue from Norway’s oil and gas industry and is so large it amounts to 2½ times the size of the Norwegian economy.
“The stock markets have performed particularly well so far this year,” Trond Grande, deputy chief executive, said in a statement, though he cautioned this was unlikely to be repeated.
The fund, whose return of 2.6% in the second quarter beat its benchmark by 0.3 percentage points, has for some time said its returns are likely to ease as ultra-low interest rates drag down performance.
However its investments underpin Norwegian state expenditure and the government withdrew 16 billion crowns in the second quarter, having taken out 23 billion in the first three months.
The fund reiterated it would remain an investor in Britain after Brexit, where it is one of the country’s largest foreign investors.
“Our judgement of the situation is the same as it has been: The UK will remain an important investment destination for us,” Grande told Reuters on the margins of the results presentation.
Britain is the second-largest country destination for the fund after the United States, accounting for 9.1% of total investments at end-2016.
In May the fund expanded its partnership in London’s Regent Street with the Crown Estate by acquiring stakes in three additional properties for 30 million pounds (US$38 million).
A government-appointed commission said in June the fund should be split from the central bank, partly because of the demands it was placing on the central bank’s board and senior management.
Deputy central bank governor Egil Matsen, in charge of supervising the fund, said the fund would publish its views on the proposals in October. “We are working intensely on formulating our answers,” Matsen told Reuters, declining to say whether he had drawn any early conclusions.
(US$1 = 7.9145 Norwegian crowns)
(US$1 = 0.7796 pounds)