Norway’s sovereign wealth fund loses record $174bn after tech bets go wrong

The fund's big bets on technology made a return of minus 27pc

Norway sovereign wealth fund CEO Nicolai Tangen
Nicolai Tangen, the fund's chief executive, said it's currently facing the greatest challenges in 30 years due to the fallout of the war in Ukraine Credit: REUTERS

Norway’s $1.3 trillion sovereign wealth fund posted its steepest-ever first half loss as big bets on tech backfired.

The Oslo-based fund lost $174bn of its value in the six months to June, its biggest on record in currency terms.

It lost 17pc on stocks, which make up the largest share of its investments, and 9.3pc on fixed-income assets such as bonds.

The fund’s bets on technology – its most valuable holdings are Apple, Microsoft and Google-owner Alphabet – performed poorly, making a return of minus 27.6pc over the period. The fund lost 38bn kroner (£3.25bn) on its investment in Meta, the parent company of Facebook and Whatsapp.

Investments in consumer businesses such as car companies and luxury goods makers also fared poorly amid soaring inflation, returning minus 24.9pc.

“These stocks had a difficult start to the year, with investors anticipating weaker demand from households in response to rapidly rising prices for essentials such as energy, housing and food,” it said in its half-year report.

Nicolai Tangen, its chief executive, said: “The market has been characterised by rising interest rates, high inflation, and war in Europe.”

He has previously warned that the fund – which was set up in the 1990s to invest Norway’s substantial oil and gas revenues abroad – is facing the greatest challenges in 30 years due to the fallout of the war in Ukraine.

It announced in February that it would drop Russian assets from its portfolio following the invasion of Ukraine, but has struggled to exit its positions due to Kremlin sanctions.

Despite the steep sell-off, the fund’s total return was 1.1 percentage points higher than the benchmark it measures performance against.

Performance was helped by energy holdings, which returned 13.2pc over the period.

In recent years the fund has been cutting back on investments in commodities, oil and gas, as part of net zero commitments. 

Mr Tangen said: “This is the first time in two decades that we have generated an excess return in a sharply falling equity market. We do not expect a similarly strong relative

return in the future.”

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