World’s biggest wealth fund suffers record $250b loss

Norway’s sovereign wealth fund, the world’s largest, made a record loss of 1.68 trillion Norwegian crowns ($250 billion) in the first half of 2022 as stocks and bonds were hit by global recession fears and rampant price inflation.

The $US1.3 trillion ($1.9 trillion) fund’s return on investment was a negative 14.4 per cent for the January-June period, which was still 1.14 percentage points ahead of the return on its benchmark index.

The decline, led by a 28 per cent plunge in the value of its technology stocks, was the largest of any six-month period in the fund’s 26-year history, although some losses have since been recovered as markets turned positive in July and August.

“The market has been characterised by rising interest rates, high inflation, and war in Europe,” chief executive Nicolai Tangen of Norges Bank Investment Management, which operates the fund, said in a statement.

Tangen, who last year delivered the fund’s second-highest profit on record, has repeatedly warned of weak markets ahead and that the fund, which is allowed to deviate only slightly from its benchmark indices, would thus also decline.

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“This is well within what one can expect,” Tangen said of the first-half loss.

The biggest loss in its stock portfolio came from Facebook owner Meta Platforms, where the value of the fund’s investment declined by 38 billion crowns, followed by Amazon with 35 billion and Apple with 30 billion.

After surging while COVID-19 increased demand for online shopping and entertainment, tech and social media stocks have been hit by higher interest rates and competition between platforms for advertising budgets being eaten into by inflation.