10 years with solid growth

Published:

Norway´s portfolio investments abroad amounted to NOK 9 136 billion at the end of 2016. In the last 10 years, the total portfolio investments have increased from NOK 2 721 billion.

2016 was a year with a moderate strengthening of the Norwegian Krone and some growth in the international financial markets. Measured in Norwegian Krone, we saw a modest increase in the total value of the portfolio investments.

The Government Pension Fund Global dominates the last 10-year period

From the end of 2006 to the end of 2016, the Norwegian portfolio investments abroad increased from NOK 2 721 to 9 136 billion, an increase of 336 per cent. The central government sector, dominated by Government Pension Fund Global, has remained the largest investor sector throughout the period. At the end of 2006, the central government’s portfolio investments amounted to 70 per cent of Norway’s total portfolio investments. At the end of 2016, this share had increased to 81 per cent. This relationship is illustrated in figure 1 below.

Figure 1. Total portfolio investment compared with Central Government

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Portfolio investment, total 2721 2944 3663 3757 4283 4442 4996 6413 7904 9066 9136
Central Government 1915 2092 2773 2753 3175 3297 3811 5048 6341 7362 7427

Another major development in the portfolio investments in the last 10 years is the composition. At the end of 2006, 60 per cent of the total portfolio investments was placed in debt securities, while 40 per cent was placed in equity. By the end of 2016, this relationship looks quite different, with 60 per cent allocated to equity and 40 per cent to debt securities. The reason behind this development lies in the investment strategy of the Government Pension Fund Global. In 2007, the maximum equity portion was increased from 40 to 60 per cent. We can see this strategy unfold from 2007 and in subsequent years in figure 2 below.

Figure 2. Asset allocation over time

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Equity 40.40 45.31 38.85 54.36 55.72 54.00 55.90 57.77 58.20 58.64 60.00
Debt securities 59.60 54.69 61.15 45.64 44.28 46.00 44.10 42.23 41.80 41.36 40.00

Investment countries have remained relatively stable in the last 10-year period. Well developed financial markets receive a large share of the total portfolio investments. The investments in the ten largest investment countries amounted to 71 per cent of the total portfolio investments at the end of 2016. All of these 10 countries are OECD member states. Norway had its largest portfolio investment in the USA, with NOK 2 959 billion. United Kingdom, Japan, Germany and France are the next biggest investment countries.