From WHIO TV7
Norway’s sovereign wealth fund, the world’s largest of its kind, has hit a milestone value of $1 trillion, beating all expectations since its creation over 20 years ago.
The fund, which reached its record value early Tuesday, has been boosted lately by a rise in stock markets and a weaker U.S. dollar, which increases the dollar value of its holdings in other currencies.
Norway first deposited oil and gas profits into the fund in May 1996 and CEO Yngve Slyngstad said nobody at the time had expected it to hit the trillion dollar mark, calling the growth “stunning.”
The fund invests proceeds from the country’s oil and gas industry to secure pensions for future generations in Norway, a country of merely 5.3 million people.
Because of its sheer size, the fund does not reinvest all its money in Norway, or it would overheat the economy. So it places it worldwide, with some 42 percent in North America, 36 percent in Europe and 18 percent in Asia.
Of the total, 65 percent is in stocks — including a $7.4 billion stake in Apple and $5.5 billion in Alphabet. It puts 32 percent in fixed-income like bonds, and 2.5 percent in unlisted real estate, according to data from the company that handles the fund, the Norges Bank Investment Management.
While there are bigger investment funds around the world, Norway’s is the biggest sovereign wealth fund, specifically meant to invest the wealth of a country’s citizens.
Norwegian lawmakers passed a law in 1990 to establish a government-owned oil and gas fund. In 1998, its management was transferred from the Norwegian finance ministry over to the Norges Bank Investment Management, a unit of the Norwegian central bank.
From Reuters
Norway’s $1 Trillion Wealth Fund Backs Linde-Praxair Deal
OSLO (Reuters) – The proposed $74 billion (£54.81 billion) tie-up of German industrial gases group Linde <LING.DE> and U.S. peer Praxair <PX.N> got a boost on Tuesday when the world’s biggest sovereign wealth fund said it was backing the deal.
The Norwegian fund, which also said the value of its assets had topped $1 trillion, will vote in favour of four key resolutions proposed by Linde’s management at a Sept. 27 meeting of shareholders, it said. “We support the strategic rationale for the merger … the proposed business combination is in the best long-term interest of Linde AG shareholders,” Norges Banks Investment Management (NBIM), which manages the fund, said in a statement.
NBIM, which only discloses the size of its individual holdings once per year, owned 4.76 percent of Linde’s shares at the start of 2017, worth $1.46 billion, and 1.0 percent of Praxair, valued at $335.6 million. “We seek to provide clarity and avoid any potential market speculation about our voting decision,” it said.
“Norges Bank Investment Management has tendered all shares held in Linde AG in connection with the business combination.” The value of the Norwegian fund, which owns about 1.3 percent of all globally listed equities and also has large positions in fixed income and real estate, has hit $1 trillion, NBIM confirmed.
A Reuters calculation, based on the fund’s own live valuation on its website, showed the fund hit the trillion-dollar mark on Sept. 12.
Established to save oil and gas revenues for future generations, the fund is now worth about 2.5 times Norway’s annual gross domestic product, against original projections it would peak at 1.3 times GDP in the 2020s.
“I don’t think anyone expected the fund to ever reach $1 trillion when the first transfer of oil revenue was made in May 1996,” said NBIM Chief Executive Officer Yngve Slyngstad.
“Reaching $1 trillion is a milestone, and the growth in the fund’s market value has been stunning,” he added. The milestone was reached partly thanks to a rise in the fund’s dollar value in recent months caused by the dollar’s own decline against other major currencies. Measured in Norwegian crowns, the fund stands at 7.81 trillion, below the 8 trillion crowns it hit in April.
