NORWAY - Norway's Government Pension Fund Global has grown to NOK3trn ($512bn) for the first time in its 14-year history.
Since investing an initial NOK1.98bn in 1996 in the same way as the country's foreign exchange reserves, the fund has expanded into international stock and bond markets and is currently planning its move into real estate. The fund first passed $500bn on 5 October.
The market value is largely determined by inflows of capital, returns and fluctuations in the krone exchange rate. The fund had NOK2,379bn in capital inflow and NOK430bn in returns between May 1996 and 30 June 2010, while changes in the krone exchange rate reduced the market value by NOK3bn.
"The fund has grown faster and bigger than most people expected since getting its first inflow of capital in May 1996," says Yngve Slyngstad, chief executive officer of Norges Bank Investment Management (NBIM), which manages the fund.
"A surge in oil prices since 2002 increased the size of capital inflows, which reached a record NOK384bn in 2008 before dropping in 2009 and 2010. Increased equity investments, particularly in emerging markets, also helped the fund's growth."
The fund boosted its share of equity investments to 60% from 40% between the summers of 2007 and 2009, reducing fixed-income investments to 40%. It got a mandate on 1 March this year to invest as much as 5% of its assets in real estate through a corresponding decrease in fixed-income investments.
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