Norway’s sovereign wealth fund, the Government Pension Fund Global, has dethroned its Japanese counterpart and is now the world’s largest asset owner.
Recently, the Japanese Government Pension Investment Fund (GPIF) announced that it achieved a return of 22.67 percent in fiscal 2023. The fund’s assets rose to the equivalent of 1,530 billion dollars at the end of March, mainly due to strong performance of both foreign and domestic equities, which yielded 40.06 percent and 41.41 percent, respectively. The GPIF posted a profit of 282 billion dollars for the fiscal year ended March.
Despite these impressive figures, the GPIF is no longer the world’s largest asset manager. That honour now goes to the Norwegian Government Pension Fund Global, managed by Norges Bank Investment Management (NBIM), which took the top spot with about 1,680 billion dollars in assets, roughly 295,000 dollars per Norwegian citizen.
NBIM reported a return of 6.3 percent in the first quarter of this year, with assets in the pension pot growing to a converted 1,680 billion. ‹Our equity investments performed particularly well in the first quarter, mainly thanks to the technology sector,› Trond Grande, deputy ceo of NBIM, said in a statement in April.
Weak yen
The weak yen, currently hovering near its lowest level in 38 years, contributed to the relative decline in the value of Japanese dollar-denominated assets. The yen has fallen more than 12 per cent against the dollar this year, making it the worst-performing currency among major currencies.
The GPIF posted a 15.83 percent return on foreign bonds in the past fiscal year, while domestic bonds recorded a negative return of 2 percent.
The fund divides its investments roughly equally between foreign and domestic stocks and bonds. Other asset classes get only a marginal allocation, but the fund is exploring new investment opportunities.
In March, the GPIF requested information on investments in gold, cryptocurrency and timber. In April, the fund announced a partnership with Dutch pension fund ABP to invest in infrastructure. Only 1.46 percent of GPIF›s total portfolio is allocated to alternative investments, with PE accounting for 0.28 percent of the total.
Private equity
Interestingly, the Norwegian sovereign wealth fund has a notorious aversion to private equity, while the GPIF saw its private equity portfolio increase by almost 46 percent to 4.2 billion dollars last year, according to the annual report.
GPIF›s PE portfolio, comprising buyout, growth capital, venture capital and turnaround funds, has posted a return of over 18 per cent since its inception in 2015. Domestic investments, denominated in yen, have posted a loss of 5.26 percent.