Norges Bank
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Norway’s $2 trillion sovereign wealth fund — the largest of its kind in the world — on Wednesday reported a 5.8% return during the third quarter, powered by strong stock market gains and AI optimism.
Norges Bank Investment Management (NBIM) manages the fund on behalf of the Norwegian population. Set up in the 1990s to invest excess revenues from Norway’s oil and gas industry, the enormous Government Pension Fund Global is currently invested in assets across 70 countries, including almost 9,000 companies.
Its portfolio comprises a mix of equities, fixed income, renewable energy infrastructure and real estate.
The return on its equity investments for the quarter was 7.7%, while its fixed income investments made 1.4%. Renewable energy infrastructure added 0.3%, while real estate returned 1.1%.
Trond Grande, deputy CEO of Norges Bank Investment Management, said strong stock market gains in basic materials, financials and telecommunications helped drive performance during the quarter.
Asia-Pacific was also a key region for the portfolio over the period, Grande told CNBC in an interview Wednesday. He highlighted AI optimism among tech companies, as well as improvements in corporate governance, particularly in Japan and South Korea.
Asked by CNBC’s Julianna Tatelbaum if there is an AI bubble in markets, Grande said: “I wouldn’t use that word. I think we see elevated pricing, but we also see strong earnings. There’s obviously a lot to say for this technology. However, I think the jury is still out on exactly who is going to monetize this new technology in the best way.”
He added that the fund looked to spread its investments broadly in order to diversify its portfolio.
Positive earnings
At the end of September, the fund had a value of 20.4 trillion Norwegian kroner ($2 trillion), an increase of 854 billion Norwegian kroner during the the three-month period. The accounting value was 1.03 trillion kroner, translating into a profit of $102.56 billion.
The fund’s return was 0.06% lower than the benchmark index, NBIM said Wednesday.
U.S. stocks account for almost 40% of NBIM’s equity investments.
Among NBIM’s U.S. equity holdings are stakes in tech giants Meta, Alphabet, Amazon, Nvidia and Microsoft. The fund is also a major shareholder in companies including JPMorgan Chase, Walmart, Eli Lilly and Coca Cola.
During the reporting period, stock markets were volatile, with the major U.S. averages seeing both selloffs and record highs as Wall Street grappled with U.S. tariffs and looked for clues on the trajectory for the American economy.
However, Big Tech stocks largely saw gains over the course of the quarter, as investors continued to bet big on the AI boom. More recently – and since the NBIM reporting period ended – volatility has taken hold of tech megacaps, amid growing concerns that an AI bubble is forming in equity markets.
Overall, 71.2% of its investments are allocated to equities, 26.6% to fixed income, 1.8% to unlisted real estate and 0.4% to renewable energy infrastructure.
Capital inflows into the fund reached 81 billion kroner after management costs during the period.
In early September, the fund announced a decision to invest $543 billion in a Manhattan office tower.
In the three months to Sept. 30, the Norwegian krone appreciated 0.7% against the U.S. dollar. Over the course of the year, the Norwegian currency has gained 12% versus the greenback.
Last month, NBIM drew the ire of the Trump administration following a decision from Norwegian officials to restrict the sovereign wealth fund’s investment activity in Israel.
The U.S. State Department told CNBC at the time that it was “very troubled” by the fund divesting its stake in New York-listed Caterpillar, a move that came amid concerns in Norway about certain companies’ ties to the conflict in the Gaza Strip.