On February 27th Norway’s sovereign wealth fund, the world’s largest sovereign wealth fund, released its 2019 annual report, which achieved a record return on investment of 19.95 per cent on last year’s stock market, with a record return of 1.69 trillion Norwegian kroner ($180 billion), or about $126 billion.
It is worth noting that only 69 of the world’s 186 countries had A GDP of more than $180 billion in 2018, or more than 117 countries a year, when Norway’s sovereign wealth fund earned more than that.
It is worth noting that Norway’s population was only about 5.33 million in 2019, and the sovereign fund alone earned 126 000 yuan, equivalent to an average of Rmb236,400 per citizen last year. Hou Anyang, chairman of Shenzhen Shangshan Rushui Investment, said, “The people of this country can lie down and win.” “
So how does Norway’s sovereign wealth fund allocate its global assets? Which company’s stock did you buy? What about investing in China?
A trillion dollars a year, more than 100 countries GDP
There have been gains and losses, with Norway’s sovereign wealth fund also losing 232 billion Norwegian kroner (about $24.5 billion) in 2018. By 2019, however, the fund will not only have made its losses back, it will also be on record scale.
On February 27th Norway’s sovereign wealth fund released its 2019 annual report, which last year posted an all-time high of 1.69 trillion Norwegian kroner (about $180 billion) – $1263.423 billion, making the most since the fund began publishing results in 1998. The fund has earned more than 117 countries in 2019.
In addition, Norway’s population of only about 5.33 million people in 2019, the sovereign fund alone made 1260 billion yuan, equivalent to an average of 236,400 yuan per citizen last year.
At the end of 2019, the total assets of Norway’s sovereign wealth fund were 10.09 trillion Norwegian kroner (about $1.07 trillion), or 7.53 trillion yuan.
What is the concept of $1 trillion, Japan’s GDP is $5 trillion a year, Russia’s about $1.5 trillion, Indonesia’s about $1.1 trillion, equivalent to Indonesia’s gdp for a year, ranking around 15th in global GDP.
“To spread it to each national, that is, each national can be divided into 200,000 dollars, the same conversion into RMB is 1.4 million yuan … Count as an ordinary family of four, that is, can be divided into 5.6 million. Hou Anyang said.
At the same time, the fund’s annual return for 2019 was the second-highest on record at 19.9 per cent, with total earnings 0.23 percentage points higher than the benchmark index’s.
Much of this success is due to the fact that the fund has most of its equity assets. The fund’s global portfolio accounts for 70.8 per cent of equity investments, 2.7 per cent for unlisted real estate and 26.5 per cent for fixed income.
Thanks to a sharp rise in the world’s major markets in 2019, the fund’s return on equity return was 26.0 per cent, the return on investment on listed and unlisted real estate was 10.4 per cent (6.8 per cent unlisted) and the return on investment on fixed income was 7.6 per cent.
Technology stocks contributed the best gains, Apple’s Microsoft Google position slot slot in the top three, Ali into the top 10
In terms of the investment of Norway’s sovereign wealth fund in 2019, the top five markets for equity investment spree are the United States, the United Kingdom, Japan, France and Germany, with the United States accounting for 39.8 percent, or 284.769 billion Norwegian kroner (about 2105.793 billion yuan).
The Chinese market is the seventh largest, with china’s portfolio investment as a percentage of the fund rising to 4.3% from 3.6% last year, or 308.738 billion Norwegian kroner (about 230.346 billion yuan). As far as A-shares are concerned, in the third quarter of 2019, there are 40 of the top 10 circulating shareholders with the names of the Norwegian Central Bank, of which the maximum market value of the shares are The Top Five of the Gujing Gong Wine, Haida Group, Goehl Shares, Kaixing, lepu Medical.
Among them, technology stocks were the best performers in 2019, with a return of 42.3 per cent, driven mainly by software and semiconductor companies, while industrial stocks rose 30.3 per cent, second, and the most-held financial stake contributed 23.7 per cent. It is worth noting that finance, technology and industry are also the fund’s largest holdings, accounting for 23.6%, 14.6% and 13.4% respectively.
In terms of individual stocks, the top five heavyweights are Apple, Microsoft, Google parent Alphabet, Nestle and Amazon. Among them, Alibaba ranked eighth, Tencent ranked 15th, with 51.992 billion Norwegian kroner (about 38.810 billion yuan) and 34.056 billion Norwegian kroner (about 25.422 billion yuan) respectively.
Save money, sustainable investment, earn more than $4 trillion in 23 years
The so-called sovereign wealth fund refers to the investment funds established and owned by the state, through investment in the global market to achieve the increase of national wealth. The earliest sovereign wealth funds began in 1953, when Kuwait used its oil export revenues to set up the Kuwait Investment Authority to invest in international financial markets.
The creation of Norway’s sovereign wealth fund is also oil-related. In 1969, Norway discovered the world’s largest offshore oil field, which grew rapidly because of its large oil base.
Oil is an important source of income for Norway, and in order to avoid running out of oil, in 1990 the Norwegian parliament passed legislation to create what is now the sovereign wealth fund, in which the first funds were deposited in 1996.
There is a broad consensus on how to manage the fund, “The less money we spend today, the better we are in dealing with future recessions and crises.” The budget surplus is transferred to the Fund, while the deficit is covered by the Fund. Oil revenues are gradually entering the economy. At the same time, only the fund’s proceeds were spent, not the fund’s capital. “
Save money on the one hand and invest sustainably on the other. As a long-term investor in some 9,000 companies in 74 countries, its investments have a very long-term outlook, enabling it to cope with large fluctuations in value in the short term. The goal is to generate the highest possible return with moderate risk, so that the fund can grow and bear.
Norway’s sovereign wealth fund, which made its first investment in 1996 and first published $23bn in 1998, has grown in size since then, surpassing trillions by 2019. Norway’s sovereign wealth fund has not been particularly prominent in terms of its performance over the years, with earnings of more than 20 per cent (25.62 per cent) in 2009, but have been extremely stable for 21 years, with only five years of losses, with the exception of the 2008 financial crisis, with a single-digit annualised yield of 6.1 per cent. Achieved an amazing increase in wealth compound interest.
The Norwegian government says that although revenues from oil and gas production are transferred to the fund, these deposits account for less than half of the fund’s value. Most of this is obtained through investments in stocks, fixed income and real estate. In just 23 years, the sovereign fund has earned more than 4 trillion yuan in investments.