Sunday 16 February 2020

How Norway runs its trillion dollar state fund

DW is a German public broadcast service. DW explains how Norway runs its trillion dollar state fund. Norway's sovereign wealth fund is also known as the 'Oil Fund.' It has assets of 9 trillion Norwegian kroner. That's about trillion dollars. It was set up in 1990. It is now the world's largest fund of its kind. The fund certainly makes various investments worldwide and is run by the central bank. The large money that has been put into the fund was made from Norway's vast oil reserves.

Recently, the fund's lucrative investments have become a topic of intense debate. The Norwegian parliament has barred the fund from owning stakes in a range of arms, tobacco and fossil-fuel firms. There seems to be a massive endorsement of green energy. However, environmentalists are not very happy. Environmentalists think that the fund can be managed better and more responsibly.

The Government Pension Fund of Norway actually comprises 2 entirely separate sovereign wealth funds owned by the government of Norway.

(1) The Government Pension Fund Global is also known as the Oil Fund. It was established in 1990 to invest the surplus revenues of the Norwegian petroleum sector. It has over US$1 trillion in assets, including 1.4% of global stocks and shares. This makes it the world’s largest sovereign wealth fund. Amazingly, in May 2018 it was worth about $195,000 per Norwegian citizen. It also holds portfolios of real estate and fixed-income investments. Many companies are excluded by the fund on certain ethical grounds.

(2) The Government Pension Fund Norway is smaller and was established in 1967 as a type of important national insurance fund. It is managed separately from the Oil Fund and is limited to domestic and Scandinavian investments. It is therefore a key stock holder in many large Norwegian companies, predominantly via the Oslo Stock Exchange.

OSE is known as the Oslo Stock Exchange.

This is a stock exchange within the Nordic countries. It offers Norway’s only regulated markets for securities trading today. The stock exchange offers a full product range including equities, derivatives and fixed income instruments. No. of listings: 220 (May 2017). Indices: OBX, OSEAX. Volume: NOK 4.6 billion (2017).

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