The Tell: Norways Sovereign-wealth Fund Raked In A $131 Billion Return Last Year — Heres Why

Norway’s sovereign-wealth fund raked in a return of round 1.028 trillion kroner, or $131 billion, in 2017 thanks to global stock market rallies, which let its profits swell to around one-third of its home-country’s gross domestic product in 2017.

This measures the third consecutive year of growth for the government pension fund measured in international currencies. In Norwegian kroner USDNOK, +0.0864% the returns have only risen for two years in a row. The fund’s market value climbed by 13% to 8.488 trillion kroner last year ($1.08 trillion), after surpassing the equivalent of $1 trillion for the first time in September last year, according to the fund’s annual report.

So, how did Norway manage to be so successful?

Well, the global stock rally certainly helped. Measured in international currency, the fund’s equity holdings in China, South Korea and Germany returned the most, at 43%, 36% and 26%, respectively.

But the fund’s equity allocation is heavily skewed toward the U.S., where the stock market was blazing to records, particularly in the second half of 2017, with benchmarks like the Dow Jones Industrial Average DJIA, -1.16%  and S&P 500 index SPX, -1.27%  setting repeated all-time highs. Norway’s fund increased its U.S. equity holdings every year since back in the 1990s, rising to $249.7 billion last year.

Technology names were among the best performers in the year, and strong gainers in the Norwegian portfolio, such as chip makers Nivida Corp. NVDA, -0.21% and Micron Technology, Inc. MU, +1.25% saw their shares jump 125% and 88%, respectively, last year. Also in Norway’s portfolio, dental-health supplier Align Technology Inc. ALGN, -1.02% the shares of which gained 131%, according to FactSet.

Overall, the fund held two-thirds in equities, 2.6% in unlisted real estate and 30.8% in fixed-income assets last year.