Norway’s €1.2trn sovereign wealth fund revealed this morning that it made its biggest investment loss ever in Norwegian krone terms in the first half of this year - but at an out-of-town press conference the SWF’s management also highlighted positive aspects of the dire interim results.

In the first half of 2022, the Government Pension Fund Global (GPFG) returned minus 14.4%, equating to a loss of NOK1.68trn (€170bn), ending June with a value of NOK11.66trn, the fund’s manager Norges Bank Investment Management (NBIM) reported.

Nicolai Tangen, CEO of NBIM, said: “The market has been characterised by rising interest rates, high inflation, and war in Europe.”

Equity investments were down by 17% by the end of June, and technology stocks had done particularly poorly with a return of minus 28%, he said.

The data released showed the GPFG invested NOK681bn - nearly 6% of its total assets - in the biggest US tech stocks Apple, Microsoft, Amazon, Alphabet and Meta.


Source: Arendalsuka

Norway’s sovereign fund held its first half conference at the Arendalsuka political festival in the south of the country

Tangen said the half-year loss was the biggest fall in kroner that the GPFG had suffered since it started.

As for other asset classes, fixed-income investments made a 9.3% loss in the six-month period, unlisted real estate generated a positive 7.1% and unlisted renewable energy infrastructure - a relatively new asset class for the SWF - made a 13.3% loss, according to the interim report.

However, at a press conference held at the Norwegian annual debating event in the town of Arendal, Tangen said the fund’s return between January and June had been 1.14 basis points better than the return on the benchmark index, equivalent to NOK156bn.

“And that is the first time in the history of the fund that we beat the benchmark in a severely falling market,” he said.

As another positive point for the fund, Tangen said the GPFG had seen “a little upturn” since the first half. According to the rolling market value of the SWF displayed on NBIM’s homepage, the fund is back up to a value of around NOK12.32bn today.

NBIM also said currency movements had contributed to an increase in the fund’s value of NOK642bn, with the krone having depreciated against several of the main currencies.

In addition, the fund - which exists to invest Norway’s petroleum revenue - received an inflow of NOK356bn in the period. Trond Grande, NBIM’s deputy CEO, attributed this to the very high energy prices.

A chart shown at the press conference showed this figure to outstrip all full-year net inflows the SWF has ever received except for the NOK386bn inflow in 2008.

And while the GPFG’s fixed income investments had made a big loss, with bond prices having fallen over the months in connection with rising interest rates, Grande branded the development a fundamentally positive one for the SWF.

“It should also be said that this picture is good for the long-term investor, because it means that for the money we have invested in these bonds, we will get a higher ongoing yield from them - so all in all, a short-term loss on the bond portfolio but a higher ongoing return,” he said.