Norway’s sovereign fund reaches $1 trillion

Established to manage Norway's oil revenues, the country's sovereign wealth fund surpassed the $1-trillion (1.8-trillion-euro) mark on Tuesday thanks to the recent appreciation of the world's major currencies against the US dollar and rising stock markets across the world. This amount equals nearly $189,000 (€157,000) for each of the 5.3 million people living in Norway. 

Established in the 1990s to manage the Norwegian state's oil revenues, the fund set the record thanks to the appreciation of the world's major currencies against the dollar and a good stock market health. 

The fund mainly invests in stocks – accounting for 65.1% of the portfolio at the end of the second quarter – but also in bonds and real estate. 

The fund has invested in nearly 9,000 companies in 77 countries around the world. In value, the fund owns 1,3% of all listed companies worldwide. 2,5% of the fund is invested in unlisted real estate in cities like Paris, London and New York.

"I don't think anyone expected the fund to ever reach $1 trillion when the first transfer of oil revenue was made in May 1996," Yngve Slyngstad, CEO in Norges Bank Investment Management, said. 

This huge "piggy bank" is intended to finance Norway's welfare state when the oil wells one day run dry.  

The government, which pours all of its oil revenues into the fund, is allowed to draw only the equivalent of the expected financial returns, a ratio recently reduced from 4% to 3%. 

"Reaching $1 trillion is a milestone, and the growth in the fund's market value has been stunning," Slyngstad said.  Last year, for the first time, Norway's government began withdrawing more from the fund than it put in, as oil revenues slumped due to the tumbling price of crude.

The fund’s value is today not too dependent on global oil prices. The one trillion dollar mark hit on Tuesday comes after a strengthening of the world’s major currencies against the US dollar, combined with strong equity market, the fund says in a press-release.