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World’s biggest wealth fund returned USD 123 billion in 2020

Norway’s sovereign wealth fund, the world’s biggest, returned USD 123 billion last year as markets rode a wave of unprecedented fiscal and monetary stimulus to fight the coronavirus crisis.

Norwegians have plenty to celebrate as its Oil Fund generated a USD 123bn return in 2020. | Photo: Finn Frandsen

Its performance was buoyed by the stratospheric rise in technology stocks, which generated a 41.9 percent return for the fund, it said on Thursday.

"This is mainly due to the pandemic resulting in a massive increase in the demand for products for online working, education, trade and entertainment," Chief Executive Officer Nicolai Tangen said in the statement.

The USD 1.3 trillion fund returned 10.9 percent  overall, the Oslo-based investor said on Thursday. Its stock portfolio delivered 12.1 percent, while bonds returned 7.5 percent and real estate lost 0.1 percent. The fund said its total return was 0.27 percentage points above its benchmark.

2020 was a dramatic year for Norway’s wealth fund. Tangen, who started as chief executive in September, was brought in after a turbulent recruitment process and has already made clear he plans to change a few things at the investing behemoth. The 54-year-old wants to rely more on outside asset managers and technology to chase the best results. He’s also made clear that sustainability will become a bigger focus area.

Set up in the 1990s, the fund was created to invest Norway’s oil and gas revenues abroad. The idea was to prevent the domestic economy from overheating, while preserving and building wealth for future generations. With holdings in about 9,000 companies, the fund owns about 1.5 percent of global stocks. It’s in the process of raising its exposure to North American stocks, after having expanded the equity share of the overall portfolio to 70 percent from 60 percent in 2017.

Norway’s government made record withdrawals from the fund last year to fight the pandemic, relieving pressure on the central bank to resort to the sort of unconventional monetary policy steps needed by many of its peers.

World’s biggest wealth fund builds tool to fix investment errors 

Oil Fund hires sports psychologist to work with managers in search of better returns 

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