Norway’s $1 Trillion Wealth Fund Loaded Up on Stocks During Market Rout

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Norway’s $1 trillion sovereign wealth fund bought a net $22 billion in equities at the end of 2018 and continued to make “significant” purchases at the start of this year to take advantage of a market rout as it builds its global holdings.

• Fund in 2018 suffered first loss since 2011, declining 6.1% in 2018, or 485 billion kroner ($57 billion).
• Stock holdings slid 9.5%, bonds rose 0.6% and real estate gained 7.5%
• Fund net bought 185 billion kroner in equities in fourth quarter
• Fund held 66.3% in stocks, 30.7% in bonds and 3% in real estate end of 2018

“2018 was a year of contrasting growth expectations and apprehensions about effects of increased trade barriers,” said Yngve Slyngstad, the fund’s chief executive officer. “Concern about economic growth mounted in the fourth quarter, inciting a further decline in equity prices, including in the U.S.”

The Oslo-based fund, which holds 1.4 percent on average of global stocks, is largely at the mercy of markets when stocks tumble, though it has some leeway to stray from the indexes it follows. Stocks plunged at the end of last year, driving global indexes down, but have staged a recovery this year.

Historically, the fund will seek to load up on stocks during selloffs since it invests for future generations of Norwegians. It now is also in the process of raising the share of stocks in its portfolio to 70 percent to improve returns after struggling through years of rock-bottom rates.

The fund also bought a “significant” amount of equities in January, Slyngstad said a press conference in Oslo, bringing the fund close to its 70 percent target. Overall, its stock market buying raid equaled about 3 percent of its portfolio.

The fund’s biggest equity investments in 2018 were Microsoft Corp., Apple Inc., and Alphabet Inc., while its largest fixed income holdings were U.S., Japanese and German government bonds.

The government deposited 34 billion kroner into the fund last year, after tumbling oil prices forced its first-ever withdrawals in 2016 and 2017.

At the end of 2018, the fund was invested in 73 countries and 50 currencies. Some 34.1 percent was invested in Europe, down from 36.0 percent a year earlier. North American investment rose to 43.0 percent from 41.0 percent, while Asia and Oceania fell to 19.3 percent from 19.6 percent. Emerging markets accounted for 10.3 percent, up from 10.1 percent.

It had 813 billion kroner invested in emerging markets, down from 876 billion a year earlier. Frontier market investments in equities were 21.8 billion kroner, up from 20.7 billion kroner at the end of 2017.

To contact the reporter on this story: Sveinung Sleire in Oslo at ssleire1@bloomberg.net

To contact the editors responsible for this story: Jonas Bergman at jbergman@bloomberg.net, Stephen Treloar

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