# Norway’s wealth fund loses record $174 billion in first half of 2022
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-08-17
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Norway's Sovereign Wealth Fund Records $174 Billion
Meta Description: Norway's sovereign wealth fund, the world's largest, saw a 1.68 trillion Norwegian crown loss in 2022 due to global recession fears and inflation.
URL: https://financedigest.com/norways-wealth-fund-loses-record-174-billion-in-first-half-of-2022html

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By Victoria Klesty

OSLO (Reuters) -Norway’s sovereign wealth fund, the world’s largest, made a record loss of 1.68 trillion Norwegian crowns ($174 billion) in the first half of 2022 as stocks and bonds were hit by global recession fears and rampant price inflation.

The $1.3 trillion fund’s return on investment was a negative 14.4% for the January-June period, which was still 1.14 percentage points ahead of the return on its benchmark index.

The decline, led by a 28% plunge in the value of its [technology stocks](https://www.financedigest.com/chatgpt-mania-pumps-up-chinese-ai-technology-stocks.html "ChatGPT mania pumps up Chinese AI technology stocks"), was the largest of any six-month period in the fund’s 26-year history, although some losses have since been recovered as markets turned positive in July and August.

The market has been characterised by rising interest rates, high inflation, and war in Europe,” Chief [Executive Nicolai Tangen of Norges Bank Investment Management](https://www.financedigest.com/french-watchdog-fines-h2o-asset-management-executives-over-tennor-investments.html "French watchdog fines H2O Asset Management, executives over Tennor investments"), which operates the fund, said in a statement.

Tangen, who last year delivered the fund’s second highest profit on record, has repeatedly warned of weak [markets ahead and that the fund](https://www.financedigest.com/explainer-why-european-money-market-funds-inflows-are-lagging-behind-the-u-s-torrent.html "Explainer-Why European money market funds inflows are lagging behind the U.S. torrent?"), which is allowed to deviate only slightly from its benchmark indices, would thus also decline.

This is well within what one can [expect,” Tangen said of the first-half loss](https://www.financedigest.com/dollar-set-for-weekly-loss-amid-expectations-fed-will-slow-hikes.html "Dollar set for weekly loss amid expectations Fed will slow hikes").

The biggest loss in its stock portfolio came from Facebook owner Meta Platforms Inc, where the value of the [fund’s investment declined by 38 billion](https://www.financedigest.com/uk-investors-add-1-2-billion-to-equity-funds-in-march-calastone.html "UK investors add .2 billion to equity funds in March – Calastone") crowns, followed by Amazon with 35 billion and Apple with 30 billion.

After surging while COVID-19 increased demand for [online shopping](https://www.financedigest.com/the-high-street-is-dead-long-live-online-shopping.html "The high street is dead – long live online shopping! ") and entertainment, tech and social media stocks have been hit by higher interest rates and competition between platforms for advertising budgets being eaten into by inflation.

Founded in 1996, the sovereign [wealth fund invests revenue from Norway’s](https://www.financedigest.com/norway-wealth-fund-employee-sues-for-workplace-gender-discrimination.html "Norway wealth fund employee sues for workplace gender discrimination") oil and gas sector and holds stakes in more than 9,300 companies globally, owning 1.3% of all listed stocks.

Its $1.3 [trillion valuation equates roughly to the size of the Mexican economy](https://www.financedigest.com/floods-other-water-related-disasters-could-cost-global-economy-5-6-trillion-by-2050-report.html "Floods, other water-related disasters could cost global economy .6 trillion by 2050 -report"), the world’s 16th largest, according to some measures.

The [fund’s biggest percentage loss](https://www.financedigest.com/galois-capital-flagship-fund-to-close-after-ftx-losses.html "Galois Capital flagship fund to close after FTX losses") came in 2008 as the global financial crisis drove down its value by 23% for the full year, although the size of the fund was significantly smaller at the time and the overall loss amounted to 633 billion crowns.

All sectors in which the [fund invests](https://www.financedigest.com/norway-wealth-fund-to-consider-investing-in-unlisted-equities.html "Norway wealth fund to consider investing in unlisted equities") recorded negative returns in the first half, apart from energy, where returns were 13% as prices soared following Russia’s invasion of Ukraine.

Central banks have hiked interest rates aggressively this year to combat inflation, leading to increased borrowing [costs and lowered](https://www.financedigest.com/bmw-bets-on-design-and-recycling-not-mining-to-lower-battery-costs.html "BMW bets on design and recycling, not mining, to lower battery costs") profit margins for corporations.

The tech-heavy Nasdaq Composite and the broader S&P 500 index saw their [biggest January-June declines since the financial crisis](https://www.financedigest.com/biggest-uk-house-price-fall-recorded-since-financial-crisis.html "Biggest UK house price fall recorded since financial crisis"), while U.S. and [European government](https://www.financedigest.com/european-governments-spend-half-a-trillion-euros-on-energy-crisis-report.html "European governments spend half a trillion euros on energy crisis – report") bond markets had their worst start to any year in decades.

In total, 68.5% of the fund was invested in equities at the end of June, with 28.3% in fixed income, 3.0% in unlisted [real estate](https://www.financedigest.com/gold-london-real-estate-and-the-theresa-may-effect.html "GOLD, LONDON REAL ESTATE AND THE THERESA MAY EFFECT") and 0.1% in unlisted renewable energy infrastructure.

($1 = 9.6716 Norwegian crowns)

(Reporting by Victoria Klesty; Editing by Terje Solsvik, Mark Potter and Catherine Evans)


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