(Oil Price) – The world’s biggest sovereign wealth fund, Norway’s $1.8 trillion oil fund, has made its first investment in an external hedge fund with long-short strategies, amid changing and volatile markets, a top executive of the fund’s manager told the Financial Times.
The fund, which is commonly referred to as ‘Norway’s oil fund’ because it was created with oil and gas revenues, is a shareholder in many large companies in the world, including Big Oil.
Government Pension Fund Global, as the Norwegian fund is officially known, was created in the 1990s and the government started transferring revenues from Norway’s oil and gas industry into the fund in 1996. Since then, the fund has invested in equities and fixed income globally, raising its value with the returns.
The fund’s manager, Norges Bank Investment Management (NBIM), invested in January in an external hedge fund that bets on the rise and fall of stock prices, Erik Hilde, global head of external strategies at NBIM, told the Financial Times.
NBIM now plans to approve investments of around $250 million to other hedge funds, Hilde told FT, noting that the Norwegian fund is currently assessing long-short strategies in both Europe and the United States.
“The marketplace is changing”, Hilde told FT.
With many equity valuations looking overvalued, a long-only strategy may not be the best move in markets right now, some analysts say.
The top management of Norway’s fund, which was worth $1.8 trillion (19.7 trillion Norwegian crowns) as of March 5, are not novices to hedge fund strategies. Chief executive Nicolai Tangen is a former hedge fund manager.
Norway’s giant fund, which owns on average 1.5% of all listed companies globally, returned 13% last year.
“The fund achieved very good returns in 2024, as a result of a very strong stock market. The American technology stocks in particular performed very well”, Tangen said last month.
By Tsvetana Paraskova for Oilprice.com
