If someone mentioned wealth funds, you would likely think about countries with oil and consider countries in the Middle East. There are some very wealthy funds in the Middle East although most are tied to the Kingdoms which means there is less for the average citizen. In fact, the largest sovereign wealth fund money does come from oil and gas but is located in Norway. The government of Norway owns oil and gas reserves in the North Sea and has very strict rules on the spending of its oil money. The result is Norway’s Sovereign owns approximately 1.3% of stocks traded on the stock exchange. The fund has over $1.3 trillion in holdings and owns 9,300 companies globally.
In an article by Victoria Klesty of Reuters, the fund which made the second highest profit last year, over the first half of the 2022 lost $223 billion or 14%. Not to worry, markets have recovered in July and August which means the second half is looking good.
The fund manager is Norges Bank Investment Management whose CEO is Nicolai Tangen. At the end of June the fund held 68.5% in equities, 28.3% in fixed income, 3% in real estate and 0.1 in renewable energy infrastructure. On the equities, the fund is a large shareholder in big tech such as Meta, Amazon, Apple and Alphabet.
Linking to dividend paying stocks, often times we believe if the we had a little more money we would have institutional sized portfolio and be sheltered from the ups and downs of the stock market. The reality is the market goes up and down, however dividends help protect your overall return. Investors and Investment management professionals are studying companies from around the world and make decisions. As a small investor, the issue is why do you own the stock – does it continue to make profits, can it pay its dividend, then you can hold and reap the rewards.
There are more questions than answers, till the next time – to raising questions.