Author: Michael Zakko
Publication date: 28.03.2024
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The Norwegian Sovereign Fund tops the list of sovereign funds in the world in terms of asset value, as the Fund manages assets exceeding $1.4 trillion. It is the economic arm of the Kingdom of Norway abroad, and its investments vary between stocks and oil and petrochemical industries.
Sovereign funds go back to 1953, when Kuwait established its sovereign fund, currently known as the General Investment Authority, in order to invest its oil revenue surpluses, from which they would spread to many countries of the world.
What are sovereign funds?
Sovereign funds are funds owned by a country, and their resources consist of various assets such as stocks, bonds, state budget surpluses, or surplus cash reserves. These surpluses are invested in local or foreign markets, or in both.
Its investment policy aims to achieve some specific macroeconomic goals, such as saving for future generations, diversifying the domestic product, in addition to economic growth.
When was the Norwegian sovereign fund founded?
The Norwegian sovereign wealth fund was established after Norway discovered oil in the North Sea, with the aim of protecting the economy from the rise and fall of oil revenues, and their long-term depletion.
In 1969, one of the world's largest offshore oil fields was discovered off Norway, and the country in the northwestern part of continental Europe had a lot of oil to sell, and the country's economy grew significantly.
The fossil fuel-rich country decided to use oil and gas cautiously to avoid imbalances in the economy. In 1990, the Norwegian Parliament passed legislation to support this, which led to the establishment of what is now known as the Global Government Pension Fund. The first money was deposited in the fund in 1996, and the fund invests its money abroad only.
Investments of the largest sovereign fund in the world
Norwegian oil and gas revenues represent less than half of the fund's value, and the Norwegian sovereign fund generates most of its profits by investing in equities, fixed income, real estate, and renewable energy infrastructure.
The fund owns approximately 1.5 percent of all shares in listed companies in the world, and owns shares in more than 9,200 companies in 63 countries, with total stock holdings amounting to $790 billion.
The Fund also owns hundreds of buildings in some of the world's leading cities that generate rental returns, and the largest sovereign fund in the world receives a steady flow of income from lending to countries and companies.
During the first half of this year, the fund succeeded in achieving huge profits amounting to 1,501 billion kroner ($143 billion), but a large part of these profits disappeared during the third half of this year, as the fund incurred losses worth 33.80 billion dollars after it was exposed to sharp declines. In the value of stocks and bonds
The largest sovereign funds in the world
The list of the largest sovereign funds in the world includes four Arab sovereign funds, led by the Abu Dhabi Sovereign Fund, which ranks fourth on the list, with assets of $853 billion, after the Norwegian Fund, the China Investment Corporation, and the investment portfolio of the Hong Kong Monetary Authority.
The Kuwait Investment Authority comes in fifth place with total assets of $803 billion, followed by the Saudi Public Investment Fund, whose assets are close to $776.65 billion. In tenth place, with assets of $475 billion, comes the Qatar Investment Authority.
Given the formidable financial clout of these sovereign funds, individuals seeking to engage in global investment opportunities may consider platforms like Binance as a gateway to enter the market, offering access to diverse assets and investment instruments to align with their strategies and objectives.
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