World’s Biggest SWF Grows to $1 Trillion

Norway’s sovereign wealth fund (SWF) grew to $1 trillion Tuesday, surpassing expectations from when the fund first transferred oil revenue in 1996.

“I don’t think anyone expected the fund to ever reach 1 trillion dollars when the first transfer of oil revenue was made in May 1996. Reaching 1 trillion dollars is a milestone, and the growth in the fund’s market value has been stunning,” Yngve Slyngstad, Norges Bank Investment Management’s CEO, said in a statement.

According to the fund’s administrators, Norway’s SWF hit $1 trillion at 2:01 a.m. local time. It is now roughly the size of Mexico’s economy.

Norges bank attributed the increase of the US dollar value of the pooled capital as a factor due to bullish 2017 equity markets and a strengthening of the world’s major currencies against the dollar.

In the first half of 2017, the fund returned 499 billion Norwegian kroner. According to Norges Bank, the largest Q2 growth contributors were from Nestle, China’s Tencent, and Swiss company Novartis.

At the end of June, the fund owned 200 billion kroner in real estate, including properties in New York’s Times Square, London’s Regent Street, and Paris’ Champs Elysees.

The rainy-day pot was established in 1998 to invest revenue arising from oil extraction.

Since January 1998, the fund has generated a 5.9% annual return.

However, the fund’s use for public spending has caused concern among banks and analysts. In February, the central bank governor warned that unchecked public spending could make Norway too reliant on an uncertain source of income.

“Regardless of which government we get, the challenge will be to use less oil money,” Erik Bruce, chief analyst at Nordea Markets, said in a statement earlier this month.