The largest sovereign fund that breaks the $ 1 trillion cap for the first time

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Last Updated: Tuesday, September 28,

The largest sovereign fund that breaks the $ 1 trillion cap for the first time

 

Tuesday, September 17, 2018

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Dubai - Arabian.Net

The value of the world's largest sovereign sovereign wealth fund jumped to $ 1 trillion for the first time in its history on Tuesday, capitalizing on earnings gains driven by weaker US dollars.

This means that Norway's per capita wealth, with a population of 5.3 million, is estimated at $ 189,000.

The size of the fund is challenging, especially the creation of a sufficient market for investment. Investment in infrastructure is no longer attractive in terms of cost and nature of returns. The Norwegian Fund has reduced the number of currencies invested from 23 to only three: the dollar, the euro and the pound sterling, Given the convergence of prices and interest rates in global markets.

The world's largest sovereign wealth fund, set up in the 1990s to manage government oil revenues, is renowned for its real estate sector, injecting huge investments worth $ 26 billion at the end of June, most notably with important real estate landmarks in New York's Times Square, the Parisian Champs Elysees and Regent Street in London.

"No one would have expected this figure when the first oil revenues were transferred to the fund in May 1996," said Yngve Slyngstad, chief executive of the Norwegian fund.

"Achieving a trillion dollars is an important achievement, and the growth of the fund's market value was amazing."

Norway expects the IMF to grow until 2025, to $ 1.3 trillion. With today's $ 1 trillion ceiling, the Norwegian Wealth Fund has been anticipating expectations that it will not reach that figure before 2018.

However, as interest and oil prices fall, these estimates remain subject to market volatility.

Last year, the Norwegian government made its first direct draw from the country's sovereign fund for the first time in its history, and plans to withdraw more this year. It also reduced the outlook for the fund's investment from 4% to 3%.

On the other hand, the fund granted approval to raise its investments in equity markets to 70% from 60%, in return for a similar exit from bond markets. This can help to achieve higher returns, or at least maintain the Fund's real annual return of 8%, achieved over the past five years.

But at the same time, the head of the Norwegian fund believes that political turmoil may overshadow the global economic system and trade, which could be reflected on the Norwegian fund's investments, which own 1.3% of global shares in 9,000 companies.