2024 Nobel Prize: How the Nobel Fundation Grew 200x in 120 Years?

Recently, the Nobel Prize winners for 2024 are being announced.

2024 Nobel Prize in Chemistry awarded to David Baker from the University of Washington for computational protein design and Demis Hassabis and John M. Jumper from Google DeepMind for protein structure prediction.

The 2024 Nobel Prize in Physics was awarded to John J. Hopfield from Princeton University and Geoffrey E. Hinton from the University of Toronto for foundational discoveries in machine learning with artificial neural networks.

According to the official Nobel Prize website, the prize amount for each Nobel Prize in 2024 is 11 million Swedish kronor (approximately $1.034 million). As of 2022, the value of the Nobel Prize money has increased by 316% compared to its original amount.

Initially, Nobel foundation was only 31 million Swedish kronor. Since 1901, the total amount of prize money awarded has far exceeded this figure.

Why has this prize money not been exhausted after more than 120 years?

The answer lies mainly in investment management. It is said that the Nobel Foundation's funds have been invested in government bonds, as well as real estate and the stock market.

In the 1950s, the Nobel Foundation was granted tax-exempt status by the government, leading it to primarily invest in conservative bonds and loans, which are stable but offer lower returns.

Subsequently, with government approval, the Nobel Foundation began investing in the stock market and real estate, shifting to active investment management.

By the 1980s, as the stock market and real estate values increased, the Nobel Foundation's investments expanded, and the prize amounts also grew.

However, during the internet bubble in 2001 and the financial crisis in 2008, the assets of the Nobel Foundation depreciated.

After 2012, Gustav Karner joined the Nobel Foundation and restructured the investment portfolio, shifting most of the equity from active to passive index funds.

The Foundation also increased its investments in hedge funds, adopting strategies including long-short equities, fixed income relative value, multi-strategy, and statistical arbitrage.

What lessons can we draw from Nobel prize foundation’s investing journey?

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