Norway's wealth fund unlikely to reproduce same high returns, says CEO
Reuters
Published May 31, 2021 11:05AM ET
Updated May 31, 2021 12:16PM ET
By Gwladys Fouche
OSLO (Reuters) - Norway's $1.3 trillion sovereign wealth fund is unlikely to offer the same high returns in coming decades as it has over the past 25 years, its chief executive Nicolai Tangen said.
Monday marked the 25th anniversary of the Norwegian government's first cash injection to the central bank to help establish what has since become the world's largest such fund.
Set up to pool state's revenues from Norway's oil and gas production and prevent the economy from overheating, the fund was then turned into a sovereign wealth fund in 1998.
It has since had a net return of 4.42%, above its long-term target of 4%, mostly due to strong returns in the past decade.
But that is unlikely to continue, Tangen told Reuters.
"Now we have record low interest rates and record-high stock markets. With record-low interest rates, they are unlikely to go down further," Tangen said, adding that the relationship between risk and return was now different, for both bonds and stocks.
"So we are extremely unlikely to have any kind of repeat of the last 25 years," he added.
When it first became a sovereign wealth fund it only invested in government bonds, with corporate bonds, stocks and real estate added later. Last year, the fund was allowed to take direct stakes in renewable projects.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.