Norway’s massive sovereign fund made more than $60 billion in just six months

In Oslo, the future is bright.
In Oslo, the future is bright.
Image: Reuters/Cathal McNaughton
We may earn a commission from links on this page.

Norway’s sovereign wealth fund is now worth just over $1 trillion. It is the world’s largest fund of its kind, and is clearly determined to keep it that way. In the first half of 2017, the fund made a cool 499 billion kroner ($63 billion), the best half-year return in its history, the fund said today.

This comfortably outshines what was already a strong performance in 2016, when the fund made 447 billion kroner over 12 months. Last year, the fund partially had Donald Trump to thank for its success, as enthusiasm for the new US president sent American stocks on a tear. With more than a third of its equity portfolio held in US stocks, there was no such luck this year. American stocks returned just 0.8% in the second quarter for the fund, as enthusiasm for Trump’s purportedly business-friendly approach to government waned among traders. The biggest drags on the fund’s returns came from General Electric, AT&T, and IBM.

The star performers were European stocks. Making up another third of the fund’s equity portfolio, European equities returned 6.3% between April and June this year (pdf). Nestlé made the biggest individual positive contribution to the fund in the second quarter. Europe’s markets are resurgent amid brighter economic prospects—this optimism has made Italy’s stock market the best performing in the G7 so far this year.

However, the second half of the year looks tougher for Norway’s traders, with geopolitical tensions and terror attacks weighing on markets.

Norway’s fund is prepared. “We cannot expect such returns in the future,” said Trond Grande, deputy CEO of the fund’s management company. “The record-high return is primarily due to the fact that the fund has become so large.”

Indeed, it helps to start with $1 trillion when seeking future returns.