As recession panic and high inflation hit global markets, norway's largest sovereign fund recorded its biggest loss in the first half of this year.
On August 17, Norges Bank Investment Management announced its results for the first half of 2022. The results show that Norway's sovereign wealth fund lost 14.4% in the first half of this year, with a loss of up to NOK 1.68 trillion (US$174 billion), breaking its loss record during the financial crisis.
By sector, with the exception of a 13% return on investment in the energy sector, the Norwegian Sovereign Wealth Fund suffered losses to varying degrees in all other sectors, with the technology sector experiencing the worst performance with a return of -28%.
CEO Nicolai Tangen has said the company is facing more uncertainty and risks, and the company may face its most drastic changes in 30 years due to the Russian-Ukrainian conflict. Tangen said in a statement:
"The market is facing interest rate hikes, high inflation and the Russian-Ukrainian conflict."
"We are long-term investors, so we must tolerate this volatility."
In terms of asset classes, Norwegian sovereign wealth funds lost 17% in equity investments, 9.3% in fixed income investments, 7.1% on unlisted real estate investments and 13.3% in renewable energy infrastructure investments in the first half of this year. As of the end of June, the fund had invested a total of 68.5% in equities, 28.3% in fixed income, 3% in unlisted real estate and 0.1% in unlisted renewable energy infrastructure.
The top ten stocks dragging down its portfolio the most were Facebook parent company Meta, Amazon, Apple, Microsoft, Nvidia, Google parent Alphabet, lithography giant ASML, Tesla, German real estate company Vonovia and Netflix.
Separately, Norway's sovereign wealth fund eliminated Russian assets on February 27 this year, but decided to run into problems in its execution after Russia banned overseas investors from executing trades on its stock market.
In March, Norges Bank said it would make more detailed recommendations for lifting the fund's investment freeze in Russia and executing the sale once market operations returned to normal.
After the biggest loss on record, Norway's sovereign wealth fund has shrunk from $1.338 trillion at the end of 2021 to $1.271 trillion.
The Norwegian Sovereign Wealth Fund was created in 1996 to invest Norway's oil and gas revenues abroad. It invested in about 9,000 stocks and made its first foray into renewable infrastructure last year.
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Only investments in the energy sector recorded positive returns