The northern landscapes of Norway are one of the world’s most pristine, beautiful places. Its scenery is only matched by its citizens’ standard of living, among the highest on the planet.
Some of this is attributable to the Norwegian Sovereign Wealth Fund so the question is how much stock does Norway own?
Norway Sovereign Wealth Fund 101
According to SWFI, the Sovereign Wealth Fund Institute, Norway’s wealth fund is the world’s largest.
If you take into account total accumulated assets, Norway’s fund comes in first place, followed by China Investment Corporation (CIC) in second and Abu Dhabi Investment Authority (ADIA) in third.
The Norwegian Sovereign Wealth Fund (NSWF) generates revenue within the gas and oil industries. The fund’s worth is around 3x that of the country’s GDP and is a crucial portion of Norway’s finances overall.
The NSWF owns an average of 1.5% of all the equities listed in the world. By the end of 2019, the NSWF’s annual return was an average of 6.1% overall since the country started the fund. The fund’s 15% loss in Q1 2020 was the biggest it ever experienced.
Since the plummet, the wealth fund has purchased vast amounts of shares in companies most analysts and virtually every other investor might deem incredibly inappropriate for the average investor – but Norway is not your average investor.
Stocks such as Carnival Corp (CCL) and Royal Dutch Shell (RDS.A) suffered blunt force trauma in the aftermath of March’s sharp market decline, but these are the stocks Norway has “stocked” up on – okay, pun intended.
The fund also picked up shares of Australia’s leading mining company, BHP Group (BHP), and doubled its shares of Royal Dutch Shell.
How Much is Norway’s Sovereign Wealth Fund Worth?
Norway’s Sovereign Wealth Fund is a huge pension fund for its citizens. August’s reports sizing up the fund’s Q1 and Q2 performance for 2020 showed its worst return in history – worse than 2015’s drop and a bubble-burster after 2019’s record highs.
Incredible fluctuations in the equity markets are to blame, said a spokesperson for the fund.
Thankfully, the plummet was cushioned by a huge response in financial policies. The fund’s worth at Q2 end was 10.4 trillion kroner ($1.16 trillion USD). Equity investments were nearly 70% with fixed income coming in at 27.6% and unlisted real estate at 2.8%.
Overall, the fund’s equity investments dropped by nearly 7% and unlisted real estate investments fell by 1.6% in the first six months of 2020. The fund’s fixed income investments, however, rose by over 5%.
How Much Stock Does Norway Own?
In June 2019, the country’s fund felt a boost thanks to choppy waters in the stocks and bonds seas. The fund saw an overall return of 3% (256 billion kroner or $28.5 billion USD). By the end of June 2019, Norway’s Sovereign Wealth Fund was worth 9.162 billion kroner ($1.02 trillion USD).
At the time, stocks made up 69.3%, with the greatest returns coming from such shares as Microsoft, Facebook, and the Nestle chocolate company. The heaviest drags included Alphabet, Google’s parent company, and the computer processor giant, Intel.
Even though Q2 of 2019 was considered volatile, every equity sector of the fund made giant strides aside from the fund’s oil and fuel holdings.
What is Norway’s Sovereign Wealth Fund Used For?
Known officially as the Government Pension Fund, Norway’s Sovereign Wealth Fund is worth around $1 trillion USD and is comprised of various holdings and investments around the world.
A neat thing about the wealth fund – and Norwegians in general – is its ethical investing practices. For instance, the fund has no holdings in tobacco – the fund also cut ties with the cannabis industry in 2019. The fund does, however, have over $37 billion USD in oil with companies such as BP and Shell.
The monies used to finance the fund are derived from the country’s own oil proceeds. The country has stated, however, that it would like to not be so reliant on the price of oil and is liquidating some of those oil and gas shares.
But the country’s Central Bank has also mentioned these sales aren’t due to environmental pressure, but rather to diversify the fund’s portfolio to strengthen it for the country’s future generations. The fund’s main purpose is much the same as United States’ Social Security – to maintain the quality of life for all citizens.
How Many Norwegians Are Millionaires?
Norway has one of the world’s greatest qualities of life – high standards of living and a rich economy is necessary to make that happen.
The country’s economy is fueled by exports of oil and fuel which increases the country’s efficiency and stability – but it’s also made Norway one of the world’s richest countries. Petroleum added to the nation’s wealth in the 70s and its large seafood, lumber, and hydro-power reserves add to its diversity.
Compared to other countries, Norway’s unemployment rate is extremely low making for an incredibly productive nation. The combination of wealth and such high levels of productivity has enabled the country to offer its citizens free healthcare, too.
Oslo offers employment in rich sectors, such as technology, architecture, and telecommunications. Poverty is well below the world average and average wages are well above. The line between rich and poor is noticeably nearly non-existent.
In a word – Norwegians are simply wealthy. They have the lowest unemployment rate in the world which has helped shape Norwegian society. The younger generations, for instance, travel more than their older counterparts did at their age – and the younger set also tends to spend a lot of time and money out socializing. They aren’t prone to living the “simple” life by any means.
The nationwide population is about 5 million which is quite small compared to other countries, such as:
- United States – 340 million
- United Kingdom – 64 million
- Sweden – 9.5 million
Yet the country has a much higher concentration of wealth – as of 2018, about 170,000 Norwegians were considered millionaires by USD standards.
It’s clear that Norway’s high quality of life and thoughtful governance has created an extremely literate, well-educated, and wealthy population.
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