The Norwegian Sovereign Fund: Record Gains Thanks to Tech Giants

The Norwegian Sovereign Fund posted a historic return of 214 billion euros in 2024, driven by investments in major tech companies. However, the dominance of these giants is now being questioned.

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The Norwegian sovereign fund, the world’s largest, with a total value reaching 19.742 trillion Norwegian crowns (approximately 1.650 trillion euros) at the end of 2024, has once again set performance records. In 2024, the fund achieved an exceptional return of 2.511 trillion crowns (214 billion euros), equivalent to nearly 80,000 crowns per second. While this result is remarkable, it represents a slight decline compared to the 21.3% return seen in 2023, but it remains significantly higher than past performances.

An Exceptional Year for the Fund

Nicolai Tangen, the fund’s CEO, emphasized that this performance was due to a combination of factors, particularly the rise in technology stocks. These investments alone accounted for more than 1.170 trillion crowns (nearly half of the total gains), with shares in companies like Apple, Amazon, Alphabet (Google’s parent company), and Meta. The fund is now invested in nearly 9,000 companies worldwide, but its holdings in these tech giants have been a crucial driver of its performance. These companies, often referred to as the “Seven Magnificent”, were key to the financial strength in 2024.

The “Seven Magnificent” Under Scrutiny

Although the 2024 return was supported by the explosion in tech stocks, the dominance of these companies is increasingly being questioned. The concentration of the fund’s portfolio in these tech behemoths has drawn criticism from some analysts and political figures. The recent decline in the stock values of some of these companies has fueled concerns about the fund’s dependence on these stocks.

However, Nicolai Tangen tempered these criticisms by stating that such concentration is neither new nor unreasonable, given the size and growth of these companies. He also pointed out that the fund’s investments are not limited to just tech companies, although these have played a dominant role in its returns.

An Uncertain Future

Despite these exceptional results, Tangen was careful to remind that these returns may not be sustainable in the long term. The fund’s CEO noted that while it was a very good year, this momentum will not last forever. The strong performance in 2024 is largely tied to favorable conditions for tech stocks, a sector that is often volatile. Global economic uncertainty and geopolitical tensions could eventually impact these investments.

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