Norway's large 'oil fund' has lost $174 billion in just six months, the biggest loss ever for a half year.
👉 Background: Cast your mind back to 1969. The swinging sixties were about to give way to the free love seventies… and Norway discovered it had bucketloads of oil to sell. Norway’s economy grew pretty quickly after that, but what to do with that money?
👉 What happened: In 1996, Norway popped all this surplus cash into a fund colloquially known as the ‘oil fund’. These days, Norway’s fund has invested in 9,000 different stocks and is worth around $1.3 trillion in value.
👉 What else: But it’s not immune to market conditions. The fund has lost $174 billion in just six months, or 14.4%. It’s the biggest loss ever for a half year. Ouchhhh.
💡A sovereign wealth fund is a government-owned investment fund. Put simply, these funds take domestic government money and invest it in all kinds of assets globally. The idea is to invest the country’s surplus money to build wealth for future generations.
💡Norway has the world’s largest sovereign wealth fund, but there are heaps of others like the Abu Dhabi Investment Authority with just over $800 billion USD under management and Australia's Future Fund with around $170 billion.
💡Norway’s fund reckons it ain’t likely to see a return to glory anytime soon. So we’ll have to wait and see how long sovereign wealth funds take to bounce back from these tough economic conditions.
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