It’s the world’s biggest fund, it’s backed by Norway’s huge oil and gas resources and it has just taken a big hit. Rising inflation and interest rates don’t spare ANYBODY.
Today, in October 24th, Norway’s massive $1.4 trillion sovereign wealth fund, the world’s largest, announced a substantial loss of 374 billion crowns ($33.80 billion). This setback was primarily driven by rising interest rates and overall economic weakness, causing declines in all asset categories. The fund’s return on investment was -2.1% for the period from July to September (Q3), which was nevertheless 0.17 percentage points better than its benchmark index. In other words: it was a controlled mini crash.
Equities, the largest asset class comprising 70.6% of its value during the quarter, suffered a 2.1% loss. Fixed income investments (mainly standard bonds), accounting for just over a quarter of its assets, incurred a 2.2% loss, while real estate assets experienced a 3.3% decline. The widespread nature of these losses suggests a fundamental macroeconomic factor at play, likely attributed to the ongoing increase in interest rates, as stated by Trond Grande, Deputy CEO of the fund.
It’s worth noting, however, that in April the fund announced a profit of 893 billion Norwegian crowns ($83.89 billion) for the first quarter of 2023.
