The war costs dearly to Norway’s sovereign wealth fund: 150 billion up in smoke

He was always top of the class. Now Norway’s sovereign wealth fund, which is also the world’s largest wealth fund, has leapt to prominence for its poor performance last year. Following the war in Ukraine, 2022 ended with record losses of 1.64 trillion crowns (152 billion euros) for the fund which had not seen numbers in the red since 2008. At the time, the losses were less than half of those communicated today and amounted to 633 billion crowns.

«The market was affected by the war in Europe, by high inflation and by the increase in interest rates – explained Nicolai Tangen, head of the fund -. This has had a negative impact on both the stock and bond markets, which is very unusual.”

The negative result ends a long record run of positive data, and annual yields exceeded SEK trillion in each of the years 2019 to 2021. Also contributing to the poor performance were the loss in value of shares in technology companies and of social media that last year experienced phases of deep collapses in the wake of the rate hike.

Central banks in many countries have been aggressively raising interest rates to fight inflation. This leads to an increase in financial burdens and a reduction in profit margins for companies.

Established in 1996, the Norwegian fund invests the proceeds of the Norwegian oil and gas sector. It has stakes in approximately 9300 companies worldwide and owns 1.3% of all publicly traded shares. However, it also invests in bonds, real estate and renewable energy projects.