Norway’s sovereign wealth fund publishes its third quarter 2024 results

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

The so-called Government Pension Fund Global, one of the largest investors in the world, stated at the end of September that its value was 18.87 trillion crowns.

The fund’s overall return for the quarter was 4.4%, 0.1 percentage point lower than the return of a benchmark index set by Norway’s Ministry of Finance. The benchmark index against which the fund is measured is based on the FTSE Global All Cap index for equities and the Bloomberg Barclays indexes for fixed income.

Trond Grande, deputy CEO of Norges Bank Investment Management (NBIM), which manages the world’s largest sovereign wealth fund, said recent changes in monetary policy had “quite a significant impact” on the fund’s third-quarter results.

“It’s been a pretty choppy quarter if you think about it. It started with a lot of volatility throughout the summer in July and into August and then there was speculation about a soft landing and whether the Federal Reserve would make cuts,” Grande told CNBC’s Silvia Amaro. on Tuesday.

“What I think you’ve seen in our numbers is that with a rising tide, all boats rise, right? And so you saw a very broad rally in the stock market based essentially on lower interest rates.”

The results come shortly after NBIM warned that elevated uncertainty and a “completely different geopolitical situation” meant there were now more risks to global stocks.

Equities, which represented 71.4% of the fund in the third quarter, obtained a return of 4.5%. The profitability of fixed income investments, which represent 26.8% of the fund’s assets, stood at 4.2% during the period.

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

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

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

However, the Bank of Japan held interest rates steady last month as it continues to cautiously advance monetary policy normalization. Japan’s central bank is seen as an outlier in the global shift toward easing.

When asked about the outlook for tech stocks in the coming months, NBIM’s Grande said: “That’s a tough question, right? Because tech has had a phenomenal ride thanks to all the hype – let’s call it excitement – about the AI.”

“So I think it’s a situation where maybe you have to be a little careful,” he added.