Fund tops 3 trillion kroner for first time
Norway’s Government Pension Fund Global, set up to safeguard the country’s oil wealth for future generations, rose today to 3 trillion kroner for the first time in its 14-year history.
“The fund has grown faster and bigger than most people expected since getting its first inflow of capital in May 1996,” says Yngve Slyngstad, chief executive officer of Norges Bank Investment Management (NBIM), which manages the fund.
Since investing the initial 1.98 billion kroner in the same way as the country’s foreign exchange reserves, the fund has expanded into international stock and bond markets and is currently planning its move into real estate. Its market value reached a record 3 trillion kroner, equal to about $512 billion, as of 00:23 a.m. Norwegian time today. In another milestone, the fund first passed $500 billion on 5 October.
The market value is largely determined by inflows of capital, returns and fluctuations in the krone exchange rate. The fund had 2,379 billion kroner in capital inflow and 430 billion kroner in returns between May 1996 and 30 June 2010, while changes in the krone exchange rate reduced the market value by 3 billion kroner.
“A surge in oil prices since 2002 increased the size of capital inflows, which reached a record 384 billion kroner in 2008 before dropping in 2009 and 2010,” Slyngstad says. “Increased equity investments, particularly in emerging markets, also helped the fund’s growth.”
The fund boosted its share of equity investments to 60 percent from 40 percent between the summers of 2007 and 2009, reducing fixed-income investments to 40 percent. It got a mandate on 1 March this year to invest as much as 5 percent of its assets in real estate through a corresponding decrease in fixed-income investments.
Go to www.nbim.no for live updates on the fund’s market value.
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