Norway's Sovereign Wealth Fund Posts 13% Return, Misses Target

In 2024, Norges Bank Investment Management (NBIM), the official name of Norway's $1.8 trillion sovereign wealth fund, delivered a 13% return, or $222 billion. However, this performance fell short of the benchmark it measures itself against by 45 basis points, marking the second consecutive year of underperformance.

Strong Equity Performance

NBIM's equity investments surged by 18% in 2024, driven by the booming US technology sector. Despite the fund's underweight position in large US tech stocks, it still held significant stakes in companies like Apple Inc., Microsoft Corp., and NVIDIA Corp.

Real Estate Drag

Real estate holdings underperformed relative to the stock market, contributing to the fund's overall missed benchmark. Unlisted renewable-energy infrastructure also suffered a 10% decline in returns.

Contrarian Thinking

CEO Nicolai Tangen emphasized the value of contrarian thinking, highlighting potential benefits for US companies from President Donald Trump's deregulation plans. However, he also expressed concerns over inflationary risks posed by tariffs and labor restrictions, as well as high levels of government debt.

Index Tracking with Limited Leverage

NBIM largely tracks indices, adhering to a strict mandate from Norway's finance ministry. However, it seeks to maximize its limited leeway by holding an average of 1.5% of all the world's listed companies.

Historical Perspective

Established in the early 1990s, NBIM invests Norway's oil and gas revenues abroad with a long-term horizon. It began with $300 million and has grown to become the world's largest single owner of equities.

Government Support

In 2024, the Norwegian government contributed 402 billion kroner ($35.6 billion) to the fund.