The world's largest sovereign wealth fund, managed by Norway, reported significant losses for the first quarter, primarily driven by its investments in US technology stocks. The fund's value declined by 1.9 percent during the period, according to a statement released on Thursday. Managed by Norges Bank Investment Management (NBIM), the fund saw a reduction of 1.27 trillion Norwegian kroner, equivalent to approximately $137 billion. By the end of March, the total value of the fund stood at around 20 trillion kroner.
Trond Grande, Deputy Chief Executive, stated that the results reflect a "challenging market environment during the quarter." He noted that while fixed income and real estate investments experienced limited impact, the overall outcome was largely determined by the decline in equity markets, particularly the drop in share prices of major US technology companies.
The fund's value decreased by 1.27 trillion kroner in Q1. This was comprised of a negative accounting return of 636 billion kroner, partially offset by a net inflow of 13 billion kroner from the government. Additionally, currency fluctuations contributed to a loss of 646 billion kroner.
Despite the downturn, the fund's performance exceeded its benchmark index by 1 basis point. The majority of the fund's assets are allocated to equities, which recorded a loss of 2.6 percent. Fixed income, the second-largest asset class, declined by 0.2 percent. Unlisted real estate delivered a positive return of 1.2 percent, while unlisted renewable energy infrastructure reported a loss of 1.9 percent.
Established in the 1990s to invest Norway's oil and gas revenues, the fund's cumulative returns over recent years have significantly surpassed the government's deposits derived from fossil fuels. The fund had previously faced prolonged underperformance in its real estate holdings, leading to a strategic review and adjustment of its property investment approach last year.
Similar to many other major investors, the performance of the fund in recent quarters has been heavily influenced by large-cap technology stocks. NBIM's major holdings include Apple, Microsoft, Alphabet (Google's parent company), Amazon, and Nvidia. The fund owns approximately 1.5 percent of all listed global equities across about 7,200 companies, making its performance closely correlated with global stock market trends.
The fund operates under a benchmark index set by the Norwegian Ministry of Finance, allowing limited scope for active investment decisions. Its portfolio is allocated with roughly 70 percent in equities, 28 percent in fixed income, and the remainder in unlisted real estate and renewable energy assets.
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