Mon. Feb 17th, 2025

Norway’s oil fund lost a record $174 billion in six months



The world’s largest sovereign wealth fund suffered the highest losses in its history in the first half of 2022. Norway’s oil fund, whose equity holdings are equivalent to 1.5% of the global stock market, has become so large that it has become a quasi-index fund, largely reflecting the dynamics of that market.

The latter rose strongly last year thanks to the ultra-loose monetary policies of central banks and the reopening of economies after the pandemic, bringing the Norwegian fund a 14.5% return. However, in January-June this year, the market fell on concerns about high inflation, a possible recession and rising interest rates.

The fund, which has $1.2 trillion in assets, suffered a 14.4% loss in the first half, or $174 billion. The record dollar losses were driven by a sell-off in every sector except energy, the fund said Wednesday. Nikolai Tangen, CEO of Norges Bank Investment Management (NBIM), the fund’s management company, said at a press conference:

What was unusual this time was that the fund lost money on both stocks and bonds, Tangen added. Losses on the equity portfolio were particularly large – 17%, and on fixed income instruments – 9.3%. The biggest contributor to NBIM’s stock market losses was shares of Meta, Facebook’s parent company, which fell 52%.

Real estate investments returned 7.1%, but they accounted for only 3% of the fund’s assets. Investments in renewable energy infrastructure resulted in a loss of 13.3%.

“The main factors that determined the dynamics of the market were rising interest rates, high inflation and the war in Europe. Technology stocks performed particularly poorly, losing 28%,” Tangen said in the report.

Meanwhile, investments in the energy sector brought in 13% income in the first half of the year thanks to a sharp rise in prices for oil, gas and petroleum products.


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