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Sovereign Wealth Funds (pt. 2)

by Dobromir Risov, February 2026


Offshore oil platform to show where Norway´s oil comes from.
An offshore platform (stockimages).


Introduction

In the first blog on Sovereign Wealth Funds I introduced the reader to this little known institutional investor. In today´s blog I present one Fund in more detail: the Government Pension Fund Global or the "Oil Fund" (Wikipedia). According to the Sovereign Wealth Fund Institute, the Oil Fund is the largest Sovereign Wealth Fund today. Probably it comes as a surprise that the Fund is not based in the Middle East or in Asia, but in Europe. Next to Norway solely Ireland runs another Sovereign Wealth Fund in Europe. You can read more on that in Sovereign Wealth Funds (pt.1).



Main

According to Wikipedia there are two separate funds in Norway. Comprised under the name of „Government Pension Fund of Norway“ there ist the „Government Pension Fund Global“ and „Government Pension Fund Norway“.  The latter is limited to investments in Norway. And the former invests exclusively abroad. The „Global“ Fund is the Fund most people talk about when they talk about Norway´s Sovereign Wealth Fund. According to the Fund´s site, nbim.no the history of the Government Pension Fund Global starts in the 1960s. Then, the Norwegian government claims under water areas around the mainland called the Norwegian continental shelf.  Shortly after the Government invites oil companies to make trial drills to search for oil. The search for oil starts in 1966.

Oil riches found after 4 years of drilling.
Oil riches found after 4 years of drilling.

During the first three years of exploration the companies find no oil. It is at the end of the fourth year (1969) that oil is being found. The name of the oil field is Ekofisk, and it is one of the largest oil fields found at sea worldwide. At the picture, the Ekofisk field is in the bottom left of the shelf. The foundation of the Oil Fund took longer and took place in 1990, 20 years after oil was discovered. Back then, the Norwegian Parliament agrees to set up a Fund called the Government Petroleum Fund. It takes another six years, until the Fund receives the first transfer of funds from the Ministry of Finance to start investing.

Payouts by the Fund  

According to a Reuters article, the Norwegian Government ordered a payout in 2016 for the very first time. Since 1996 the Government has been paying into the Oil Fund solely, not withdrawing anything. According to the Financial Statements for 2016, I find in the Statement of Cash-Flows (Financing Activities) that 101 billion NOK (9 billion EUR) were paid out by the Fund. After reviewing the recent Financial Statements, there were no withdrawals during the years 2022 to 2024. The inflows into the Oil Fund by the Ministry of Finance for the same period are as follows:


The Government pays into the Fund, takes no money out and invests well.
The Government pays into the Fund, takes no money out and invests well.

 

Portfolio

According to the Fund´s website the initial investment policy was aligned with the investment policy of Norway´s Central Bank: the Fund applied a strategy to buy solely outside of Norway and entirely  bonds. That policy was to change one year later. In 1997 the fund was allowed to invest up to 40% of the capital  in a riskier asset class - equity.  Around the same time, a further step of differentiation to the Central Bank is made: the set up of a separate management – called Norges Bank Investment Management. More than 670 people work there.  

According to the Fund´s website, the Fund invests in 68 countries. Currently the Oil Fund invests 71% in equities, and 27% in fixed income, real estate investments account for 2%.  The Oil Fund invests most of the capital in the United States and Japan. The Fund returned 6.6% annualised since 1998 up to 2025, with a long-term investment focus. A quick review of the equity investments reveals the Oil Fund rarely holds more than a couple percent of the company stock. The portfolio is very much diversified.

 


Market valuation today

I picked 5 companies to compare the size of Norway´s Oil Fund looking up their valuation February 2nd. I added Alphabet (Google´s parent company) and Apple, two of the most valuable companies. I further selected the famous investment holding Berkshire Hathaway. I took also the second largest Sovereign Wealth Fund, the China Investment Corporation. Lastly

A table comparing the market valuation of Apple, Alphabet, Berkshire and Norway´s Oil Fund.
Norway Pension Fund Global is first of the second group.

I chose the Vanguard S&P 500 Exchange Traded Fund, a famous fund for individual investors. The figures are in US dollar, trillions.  Analysis:  Alphabet and Apple have twice the market capitalisation of Norway´s Oil Fund. Both companies are currently valued at close to 4 trillion. Norway´s Oil Fund comes third in the chart at 2 trillion USD. The market capitalisation of the China Investment Corporation is considerably less, at 1,33 trillion and Berkshire Hathaway is the smallest company here,  valued at 1 trillion USD.


Summary

I wrote about Norway´s Oil Fund, set up some 30 years ago. In 1969 the exploration companies find oil in the North Sea after 4 years of drilling wells in vain. In order to manage the proceeds from selling that oil well, the Oil Fund is set up by a government initiative in the late 1990s. The Oil Fund It is a very good example of how a country deals with its natural resource riches to the benefit of its people. The rare withdrawals from the Oil Fund show the government has been very prudent in the past.

From a performance perspective note how well the Oil Fund has done since its inception in 1996. An important take away for the individual investor is to befriend time. Starting to invest and giving it time are two things individual investors often overlook when it comes to successful investing. Investing intelligently is the other factor. The Fund´s management has done very well returning 6.6% annualised. Thei Oil Fund´s strategy cannot be copied by an individual investor. I show two ways for the individual investor to invest intelligently in the course Pesonal Investing.



Frequently Asked Questions (FAQ)


1. How is Norway´s Oil Fund managed? At the start in the 1990s the assets of Norway´s oil Fund were managed by the Central Bank of Norway. Capital was invested in the same way as the foreign exchange reserves of the Central Bank. Today the dedicated Norges Bank Investment Management entity invests the capital in an individual way. .

2. Does Norway´s Oil Fund hold concentrated positions? The Fund pursues a diversified approach. At the start of 2026 the Fund holds shares in more than 7000 publicly listed companies. The individual holdings are mostly in the lower single digits, so the Oil Fund does not control the companies invested in.

3. What is the Fund´s mission? The Fund was set up for future generations and for rainy days. The Norwegian Government withdrew money for the first time in 2016. The Fund belongs to the people of Norway and is not publicly listed.

4. What is the performance of the Government Pension Fund Global?  The performance is at an annualised rate of 6.6% since inception.

5. How large is Norway´s Oil Fund? Norway´s Oil Fund is the largest Sovereign Wealth Fund today. However compared to some of the most valuable companies today - Apple or Alphabet, the Fund is considerably smaller.



Source

Data on Market capitalisaiotn from Yahoo Finance.


 
 
 
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