Norway's Sovereign-Wealth Fund Closes In on $1 Trillion Valuation -- Update
August 22 2017 - 8:07AM
Dow Jones News
By Dominic Chopping
Norway's sovereign-wealth fund, the world's biggest, continued
its march toward a $1 trillion valuation after the best half-year
return in its history.
The fund announced a 2.6% return on its investments in the
second quarter of this year, helped by a solid performance from its
stock-market portfolio.
Norges Bank Investment Management, the arm of the central bank
that manages the fund, said Tuesday the quarterly return equated to
202 billion Norwegian kroner ($25.6 billion).
The total value of the fund on June 30 was 8.02 trillion
kroner--or $957.13 billion calculated at the exchange rate on that
date. This figure would have been even higher were it not for a 16
billion kroner withdrawal by the government and the strong krone,
which in combination reduced the value of the fund by 32 billion
kroner, NBIM said.
Norway approached the trillion-dollar milestone despite pressure
on sovereign-wealth funds globally. Ultralow interest rates are
crimping returns and cheap oil is cutting into the income of the
largely resource-dependent countries rich enough to possess such
funds.
Last year was the first time Norway's government, seeking to
fill a hole in its budget, withdrew more money from the fund than
it put in.
However, stock markets have set record after record in 2017,
powered in large part by a revival in U.S. corporate earnings. The
Dow Jones Industrial Average passed 22000 in August, more than
tripling from a low in March 2009.
"The stock markets have performed particularly well so far this
year, and the fund's return in the two first quarters was 6.5%,"
Trond Grande, deputy chief executive of Norges Bank Investment
Management, said.
"This gives a total return of 499 billion kroner, which is the
best half-year return measured in Norwegian kroner in the history
of the fund. We cannot expect such returns in the future. The
record-high return is primarily due to the fact that the fund has
become so large."
Equity investments generated a 3.4% return for the fund with
fixed income and unlisted real-estate providing 1.1% and 2.1%
returns respectively.
NBIM said the fund had 65.1% of its reserves invested in
equities on June 30 with 32.4% in fixed income and 2.5% in unlisted
real-estate.
Write to Dominic Chopping at dominic.chopping@wsj.com
(END) Dow Jones Newswires
August 22, 2017 07:52 ET (11:52 GMT)
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