Norway’s $840 billion sovereign wealth fund sharply increased its exposure to government debt in the world’s most advanced economies in the fourth quarter and also raised its African equity holdings, it said on Friday.
The fund, commonly known as the oil fund, was a big buyer of American, British, German and also Brazilian bonds in the quarter while ditching stocks despite a superb run on its equities investments in the previous quarters.
“The year’s results were driven by equity investments,” said Yngve Slyngstad, the fund’s chief executive. “(But) 2013 was still the first year in the fund’s history when we have been a net seller of shares.”
The fund, which invests Norway’s surplus oil revenues in stocks, bonds and real estate, made a return on investments of 4.66 percent in the quarter and 15.9 percent in all of 2013 – its second best year on record and also its best since 2009, when markets rebounded following the global financial crisis.
The fund, which the Norwegian government forecasts to grow to $1.2 trillion by the end of the decade, had increased its bond holdings to 37.3 percent of its portfolio at the end of the year from 35.5 percent three months earlier, and cut its equity holdings to 61.7 percent from 63.6 percent.
In Africa, it held shares in 176 companies at the end of the year, up from 123 a year earlier, and invested for the first time in Zambia, Tunisia and Nigeria.
The oil fund has grown six-fold over the past decade, controlling assets worth more than $165,000 per man, woman and child in Norway, but now faces criticism that it has grown too big and unresponsive.
The finance ministry is conducting a review of the fund while the central bank, which manages the fund, has already said it should be allowed to take on greater risk, invest more in real assets and lower its bond exposure as prospective returns are diminishing.