Despite the pandemic and the uncertainty, the Oil Fund registered a return of 10.9% in 2020. Technology giants such as Apple and Amazon contributed a lot.
“The market fell sharply in the first quarter, before recovering quickly in the second quarter. The whole year has been characterized by large fluctuations in the market and large differences between different sectors,” Oil Fund Manager Nicolai Tangen said while summing up the annual developments for the first time since he took over the job last September.
Although 2020 was characterized by uncertainty and large fluctuations in the market, the Government Pension Fund Global – popularly called the Oil Fund – had a NOK 1,070 billion return.
That is the second-highest return since 1998, measured in kroner.
On the equity side, it was especially American technology companies that contributed.
The individual shares that contributed the most to the fund were Apple (NOK 84 billion return), Amazon (NOK 51 billion), Microsoft (NOK 41 billion), and Tesla (NOK 36 billion).
“Technology companies had the highest return in 2020, with 41.9%. This is mainly due to the fact that the pandemic led to a sharp increase in demand for products for online work, education, trade, and entertainment,” Tangen said while presenting the figures.
“The future happened earlier”
Tangen pointed out that technology stocks fell less than the others in the downturn at the beginning of the year and that they recovered very sharply.
“You can say that the future happened earlier due to the pandemic,” said the Oil Fund’s Head of Technology and Media, Doug Shell, during the presentation of the figures.
Shares in e-commerce also increased in value, which also had ripple effects. While companies in ordinary air traffic did poorly, there was an increase in air freight due to more e-commerce.
Central Bank chief pleased
Central Bank Governor Øystein Olsen, who is also chairman of the Fund’s board, is pleased that the year’s result is once again higher than the return on the so-called benchmark index set by the Ministry of Finance. This time, the oil fund’s return was 0.27% higher.
“Despite the fact that the pandemic left its mark on 2020, it has been another good year for the Fund. However, the high return is a reminder that the market value of the Fund may also vary greatly in the future,” Olsen said.
The Norwegian krone weakened against several other currencies during the year. It also affected the Fund’s value by NOK 58 billion.
The return on the Fund’s equity investments was 12.1%. Investments in unlisted real estate returned -0.1%, while the return on fixed-income investments was 7.5%.
The state withdrew NOK 298 billion from the Fund last year, among other things, to finance corona crisis packages.
Source: © NTB Scanpix / #Norway Today / #NorwayTodayNews / #NorwayTodayFinance