World’s largest sovereign wealth fund posts $76 billion in quarterly profit as interest rates fall

Earnings

The headquarters of the Norges Bank, Norway’s central bank, in Oslo, Norway, on Tuesday, Jan. 30, 2024.
Bloomberg | Bloomberg | Getty Images

Norway’s gigantic sovereign wealth fund on Tuesday reported third-quarter profit of 835 billion Norwegian kroner ($76.3 billion), citing a stock market boost from falling interest rates.

The so-called Government Pension Fund Global, one of the world’s largest investors, said it had a value of 18.870 trillion kroner at the end of September.

The fund’s overall return for the quarter was 4.4%, which was 0.1 percentage points lower than the return on its benchmark index.

“We had a positive return across all our investment areas. Falling interest rates led to a broad rise in the stock market,” Trond Grande, deputy CEO of Norges Bank Investment Management, said in a statement.

Equities, which accounted for 71.4% of the fund in the third quarter, notched a return of 4.5%. The return on the fixed-income investments, which account for 26.8% of the fund’s assets, stood at 4.2% over the period.

The results come shortly after Norges Bank Investment Management (NBIM), which manages the world’s largest sovereign wealth fund, warned that elevated uncertainty and a “completely different geopolitical situation” meant there were now more risks to global stocks.

Norway’s sovereign wealth fund, the world’s largest, was established in the 1990s to invest the surplus revenues of the country’s oil and gas sector. To date, the fund has put money in more than 8,760 companies in 71 countries around the world.

A global easing cycle is currently under way, with major central banks taking steps to soften their aggressive stances on monetary policy as inflation falls in many high-income countries.

The U.S. Federal Reserve delivered a jumbo interest rate cut of half a percentage point last month. The Bank of England lowered rates for the first time since the coronavirus pandemic in August, and the European Central Bank last week moved to cut rates for the third time this year.

The Bank of Japan, however, held interest rates steady last month as it continues to tread cautiously on normalizing monetary policy. Japan’s central bank is regarded as something of an outlier in the global shift toward easing.

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