These huge funds usually selectively choose the property to manage risk, maximized yields and promoted national strategic interests.
This is not the case with Norges Bank Investment Management (NBIM), which is largely monitored by global stock exchange indices to fertilize Norwegian oil and gas revenues.
The fund was launched in the early 1990s to invest mainly in bonds, and over time it grew into the world’s largest kind of ownership, buying smaller ownership shares in thousands of companies around the world. Fund’s assets worth $ 1.8 trillion ($ 1800 billion) generates a significant increase in 5.5 million Nordic land inhabitants than the Norwegian oil and gas industry itself, writes Bloomberg.
But the passive approach to investment leaves him a little tool for adjusting changes in global capital flows. This was especially expression in April, when the fund reported the largest loss in the last six quarters, due to market earthquakes caused by Trump’s threat to the introduction of customs. This blow re-encouraged the debate in Norway on how to protect the fund from future shocks.
What is especially in the Norwegian State Investment Fund?
The fund differs from many of its pandan due to its strict investment rules. First, the Fund must always invest outside the Norway – the rule designed to avoid the risk of the so-called “Dutch disease”, in which resource wealth can destabilize the domestic economy.
While funds in many other countries are partly serving for encouraging the domestic industry or strategic investment abroad, NBIM has a limited space for active investment. The stock is 70% of the Fund’s total value, and the Fund holds shares in 8700 companies from 44 countries that make up the FTSE Global All Cap index.
As a result, today he owns about 1.5% of all shares that listed on world stock exchanges. The bond part of the Fund monitors Bloomberg Barclays indexes, with 70% intended for state bonds, and 30% corporate securities.
Other funds of wealth have greater freedom to adapt priorities and the way their achievement. Investment Fund Abu Dhabija is increasingly focusing on private capital, while Mubadala Investment plays a key role in the diversification of the economy through the shares in health and finance.
The public investment fund of Saudi Arabia led a vision of the transformation of the kingdom known as Vision 2030, with great investments in mining, video game industry and technology. Singapore GIC PTE increases its exposure to the US market and takes over higher risks in private markets.
How was the Norwegian state fund formed?
Norway was 1969. discovered significant reserves of oil and gas in the north sea and today the largest producer of fossil fuels in Western Europe. In order to avoid instability, corruption and weak economic growth as they have occurred in other countries rich in resources, the Norway government has introduced high taxes on the energy sector and strong regulatory control over the industry.
After the years of political hearings, Norwegian parliament was established by the oil fund to ensure that oil revenues also use current and future generations. The first capital transfer in the Fund was carried out in 1996.
As the fund spread its investments around the world, he gradually focused on the explicit support to the national pension system and was renamed the Government’s Global Pension Fund (Government Pension Fund Global). The fund is managed by NBIM, the Norwegian Central Bank Management Department.
How did the Norwegian fund become so rich?
Initially, the Fund was filled with cash from oil taxes, allowances for licenses and obtain the state energy company. At first he was limited to investments in bonds, but over time his term was expanded.
The government cannot simply take as much as he wants from the fund. The maximum of 3% of the fund’s value may be focused per year in the state budget, which is the rule intended for the preservation of wealth for future generations.
Compared to other state funds, the Norwegian fund achieved average results in a period of five years until 2023. year, with an average annual return of 7.45%.
How was the term of office of the Norwegian Fund developed?
In times, the Fund increased its investments in shares and began investing in real estate and infrastructure for renewable energy sources to diversify the portfolio. He also placed an emphasis on sustainability and responsible investment, with a growing focus on environmental, social and managerial factors, which did not change despite the opposition of Donald Trump’s so-called “woke capitalism”.
What are the ethical principles of investment by the Norwegian Fund?
Since 2004. The Fund operates according to the ethical guidelines issued by the Ministry of Finance and approves parliament. The independent ethical council monitors the implementation of these guidelines, which prohibit investment in companies involved in “severe corruption” or serious violations of human and labor rights, as well as those contributed to serious environmental damage. Companies that produce certain weapons are excluded, such as nuclear weapons and cassette bombs.
By the end of 2024. year, the Fund has expelled 67 companies from their portfolio because of their actions. Another 104 companies are excluded because they sell products that are contrary to the fund guidelines: Investments in the cannabis, tobacco and coal industry are prohibited.
The companies responsible for “unacceptable greenhouse gas emissions” are also avoided, which is paradoxical given that the Fund is full of revenues from the sale of fossil fuels.
Will the Investment Mandate of the Norwegian Fund be changed?
NBIM reported a loss of 0.6% on their investments, about $ 40 billion, in the first three months of 2025. In Norway, it was a discussion on how to protect the fund in an unstable economic environment. About 40% of the fund’s shareholders are located in the USA, and some Norwegian politicians believe that more investments should be redirected to Europe to reduce exposure to unstable American markets.
The Norwegian conservative opposition proposed a guideline audit to enable investment in companies that produce nuclear weapons. Norway currently satisfies about 30% of the European gas needs, and some politicians call for greater money transfer to Kiev, claiming that the Norwegian petroleum and gas industry achieved a huge profit due to the European Energy Crisis caused by Russian invasion in Ukraine.
What does Norway make up with the Fund’s income available?
Part of these revenues is used to support the extensive Norwegian social protection system, which includes free education and health care, strongly subsidized care for children and generous suffering.
Norway is in the third place of the UN Global Index of Human Development, just behind Iceland and Switzerland. In 2024. Year, transfers from the Fund consisted of approximately 25% of the state budget. The government proposed 4.85 billion dollars from the Support Fund of the Government of Ukraine.
(Vijesti.ba)
