Norway’s sovereign wealth fund – or oil fund – rose in value by £45billion to £600billion last year as stimulus from central banks across the world boosted bonds and equities.
The fund, the world’s biggest and an example the Scottish Government would like to follow, expects diminished returns going forward amid record low and even negative yields in key government bond markets as well as slow economic growth in developed markets.
Yngve Slyngstad, chief executive at Norges Bank Investment Management, which manages the fund, said: “2014 was a good year…, with positive results for all its asset classes.
“Strong stock markets in the first half of the year and falling yields made a positive contribution to the results.”
The fund has been expanding into more emerging and frontier markets to capture a larger chunk of global growth.
It said emerging market exposure rose to 10.6% of the fund’s investment from 10.3% a year earlier. The fund’s investments were related to 75 countries at the end of 2014, after adding Slovenia, Ghana and Mauritius during the year.
The investor, which gets its guidelines from the government, held 61.3% in stocks, 36.5% in bonds and 2.2% in commercial property at the end of 2014.
It’s mandated to hold about 60% in stocks, 35% in debt and 5% in properties. While the investor mostly follows global indexes, it has some leeway to stray from those benchmarks.
Norway’s government deposited £12.2billion of oil and gas revenue into the fund last year.
The country – Europe’s biggest oil and gas producer – generates money for the fund from energy taxes, ownership of oilfields and dividends from its 67% stake in Statoil, Norway’s largest energy company.
The fund got its first capital injection in 1996 and has since been expanding the scope of its investments. It first added stocks in 1998, emerging markets in 2000 and property in 2011 to boost returns and safeguard Norway’s wealth.
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