Norway’s sovereign wealth fund, popularly known as the oil fund, has this week reached a staggering value of one trillion U.S. dollars ($1,000,000,000,000) for the first time.
The world’s largest sovereign wealth fund got its first capital in 1996 when the oil revenue from the government was transferred to the fund for the first time. The mission of the fund to bring financial wealth for future generations of Norwegians once the oil revenues declines.
As said on the fund’s website:”The Government Pension Fund Global is saving for future generations in Norway. One day the oil will run out, but the return on the fund will continue to benefit the Norwegian population.”
Managed by the country’s central bank, the fund invests in thousands of companies and industries around the world, all outside Norway.
On Tuesday 19 September 2017 at 02:01 CET, the fund value hit $1,000,000,000,000, or 1 trillion dollar, for the first time.
Explaining the trillion-dollar mark, Norges Bank Investment Management which manages Norway’s oil wealth said a strengthening of the world’s major currencies against the US dollar, combined with strong equity markets, have rapidly increased the US dollar value of the fund in 2017.
“I don’t think anyone expected the fund to ever reach 1 trillion dollars when the first transfer of oil revenue was made in May 1996. Reaching 1 trillion dollars is a milestone, and the growth in the fund’s market value has been stunning”, says Yngve Slyngstad, Chief Executive Officer in Norges Bank Investment Management.
According to information on the fund’s website, the fund generated an annual return of 5.9 percent from the establishment of Norges Bank Investment Management in 1998 to the end of the second quarter of 2017, measured in the fund’s currency basket. After management costs and inflation, the return was 4.0 percent.