World’s Largest Sovereign Wealth Fund Climbs Closer to $2T

Norway’s sovereign wealth fund, the Government Pension Fund Global, reported a 4.4% return on investments for the quarter that ended September 30 to help raise its total asset value to 18.87 trillion kroner ($1.73 trillion), but it fell just shy of its benchmark’s 4.5% return.

The $76.5 billion investment gain was a sharp turnaround from last year’s third quarter when the pension giant’s portfolio lost 2.1% and shaved its total asset value by $34.3 billion to approximately $1.3 trillion. If the pension giant repeats the more than $400 billion gain in asset value it saw for the last year, it could be the first pension fund to crack the $2 trillion by the same time next year.

According to the GPFG, the third quarter investment return contributed 835 billion kroner to its total asset value. It also benefitted from the weakening of the krone during the quarter, which added 191 billion kroner to the pension fund, while another 99 billion kroner came from the Norwegian government.

“We had a positive return across all our investment areas,” Deputy CEO Trond Grande said in a statement. “Falling interest rates led to a broad rise in the stock market.”

Never miss a story — sign up for CIO newsletters to stay up-to-date on the latest institutional investment industry news. 

GPFG’s unlisted renewable energy infrastructure investments led the investment returns for the quarter, up 10.8%, followed by its equity investments’ 4.5% return. The GPFG’s fixed-income investments earned 4.2% for the quarter, while its investments in unlisted real estate lagged with a 0.8% return.

As of the end of September, the fund’s equity investments had a market value of approximately $1.23 trillion, while its fixed-income investments had a market value of $463.6 billion. The GPFG’s unlisted real estate investments made up $29.2 billion of the portfolio, while renewable energy infrastructure accounted for $2 billion.

The pension fund’s asset allocation at the end of the quarter was 71.4% equities, 26.8% fixed income, 1.7% unlisted real estate and 0.1% in renewable energy infrastructure investments. The 4.4% return for the third quarter followed a Q2 return of 2.12% and a Q1 return of 6.33%, while the fund reported a 10-year annualized return of 7.53%.