Picture: 123RF/PHONG PHAN
Picture: 123RF/PHONG PHAN

Norway’s sovereign wealth fund, the world’s biggest, returned $123bn in 2020 as the stratospheric rise in technology stocks padded a portfolio already buoyed by markets fattened on crisis support packages.

The $1.3-trillion fund returned 10.9% overall, it said on Thursday. Its stock portfolio delivered 12.1%, helped in large part by a 42% bounce in tech stocks led by Apple and Amazon.com. Bonds returned 7.5% while real estate lost 0.1%. The fund said its total return was about 0.3 percentage points above its benchmark.

CEO Nicolai Tangen said the huge gain in tech stocks was “mainly due to the pandemic resulting in a massive increase in the demand for products for online working, education, trade and entertainment”.

2020 was a dramatic year for Norway’s wealth fund. Tangen, who started as CEO in September, was brought in after a turbulent recruitment process and has already made clear he plans to change a few things at the investing behemoth. He   plans to rely more on outside asset managers and technology to chase the best results. He’s also said sustainability will become a bigger focus area.

The fund made about $30bn in returns just from its holdings in Apple, Amazon, Microsoft, Tesla, Alphabet and Taiwan Semiconductor Manufacturing Company (TSMC), according to Thursday’s report.

Set up in the 1990s, the fund was created to invest Norway’s oil and gas revenues abroad. The idea was to prevent the domestic economy from overheating, while preserving and building wealth for future generations. With holdings in about 9,000 companies, the fund owns about 1.5% of global stocks. It’s busy raising its exposure to North American stocks, after having expanded the equity share of the overall portfolio to 70% from 60% in 2017.

Norway’s government made record withdrawals from the fund in 2020 to fight the pandemic, relieving pressure on the central bank to resort to the sort of unconventional monetary policy steps needed by many of its peers.

Bloomberg

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