The world’s biggest sovereign wealth fund, Norway’s $1-trillion Government Pension Fund Global, expects large value fluctuations ahead, as it will rely more on the stock market value and less on income from Norwegian oil production, Yngve Slyngstad, CEO of the fund’s manager Norges Bank Investment Management, said on February 27, 2018.
«We have to expect significant swings in coming years,» Yngve Slyngstad said in Oslo for presenting the fund’s 2017 report and results. «We have to expect value swings of more than $115 billion», Slyngstad said, as carried by Reuters.
The investments in the Norwegian fund returned 13.7 % in 2017, the 3rd-highest return since the fund was created in 1998, and the highest-ever return in terms of Norwegian crowns, 1.028 trillion crowns($131 billion), said the fund that capped an eventful year, in which it crossed the historic $-1-trillion mark and recommended that it ditch oil and gas stocks - more than $35 billion worth of shares - from the fund’s equity benchmark index to make Norway’s wealth and economy less vulnerable to a permanent drop in oil and gas prices.
The announcement that the world’s biggest wealth fund could ditch energy stocks shocked the markets last year and had analysts wondering if other large institutional investors would follow suit. Norway is currently reviewing whether to accept the recommendation of the fund to stop investing in oil & gas stocks.
Last year, 66.6 % of the fund’s market value was invested in equities, 2.6 % in unlisted real estate, and 30.8 % in fixed income.
«With an allocation to equities gradually rising towards 70 %, one have to be prepared for substantial fluctuations in the value of the fund from year to year,» the fund’s board said in the annual report, noting in the accompanying presentation that it had «to expect large value fluctuations.»
Author: Tsvetana Paraskova
