Norway’s enormous national wealth fund suffers losses

• Norway’s Government Pension Fund Global, among the world’s largest investors, returned -14.1% last year.
• War in Europe, high inflation and rising interest rates were behind the poor performance.
• This negatively impacted both the equity market and bond market at the same time.

Due to “extremely unusual” market conditions, Norway’s national wealth fund on Tuesday revealed a record loss for the entire year of 2022 of 1.64 trillion Norwegian kroner ($164 billion).

One of the biggest investors in the world, the so-called Government Pension Fund Global, reported a -14.1% return last year, which it said was 0.88 percentage points more than the return on its benchmark index.

“The European conflict, soaring inflation, and rising interest rates all had an effect on the market. This had an unfavorable influence on the bond market and equities markets simultaneously, which is quite unusual, according to a statement from Norges Bank Investment Management CEO Nicolai Tangen.

With the exception of energy, all equities market sectors experienced negative returns, according to Tangen.

The previous highest loss for the fund was 633 billion kroner in 2008, during the height of the world financial crisis.

The $1.3 trillion fund was set up in the 1990s to invest the extra money generated by the oil and gas industry in Norway. The fund has so far made investments in over 9,300 businesses across 70 nations.

The fund’s fortune is based on Norway’s enormous North Sea oil and gas deposits. Indeed, a passionate discussion about international justice has been sparked by the nation’s soaring fossil fuel profits in the midst of Russia’s conflict in Ukraine.

The government has been urged to set an example for the rest of the world by investing its record petroleum revenues in a new worldwide solidarity fund by opposition politicians, well-known economists in Norway, and even giants of the nation’s energy sector.

According to the Norwegian Foreign Ministry, Norway is well conscious of the responsibility that comes with having access to such resources.

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