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The world’s largest sovereign wealth fund loses $174 billion in the first half, cites inflation and war in Europe

  • The $1.3 trillion fund returned a negative 14.4% during the period, as stocks and bonds reacted violently to global recession fears and skyrocketing inflation.
  • The fund's return on equity investments slipped 17%, while fixed income investments and unlisted renewable energy infrastructure were down 9.3% and 13.3%, respectively. 

Norway's central bank, also known as Norges Bank, in Oslo, Norway.Kristian Helgesen/Bloomberg | Bloomberg | Getty Images

Norway's sovereign wealth fund, the largest in the world, had a loss of 1.68 trillion Norwegian kroner ($174 billion) in the first half of 2022, as stock markets more broadly saw a tumultuous six months.

The $1.3 trillion fund returned a negative 14.4% during the period, as stocks and bonds reacted violently to global recession fears and skyrocketing inflation. But the fund's return was 1.14 percentage points better than the return of the benchmark index, Norges Bank, the country's central bank, said Wednesday, equivalent to 156 billion kroner.

"The market has been characterised by rising interest rates, high inflation, and war in Europe. Equity investments are down with as much as 17 percent. Technology stocks have done particularly poorly with a return of -28 percent," the CEO of Norges Bank Investment Management, Nicolai Tangen, said in a release.

The fund's return on equity investments slipped 17%, while fixed income investments and unlisted renewable energy infrastructure were down 9.3% and 13.3%, respectively. 

Norway's vast North Sea oil and gas reserves are the bedrock of the fund's wealth. Energy was the only sector to not see negative returns after the fund made huge investments in wind power in recent years.

"In the first half of the year, the energy sector returned 13 percent. We have seen sharp price increases for oil, gas, and refined products," Tangen added.

NBIM's (Norges Bank Investment Management) performance is "symptomatic" of a larger trend across most major investment funds, Economist Intelligence Unit analyst Matthew Oxenford told CNBC.

"The first half of 2022 saw significant upheaval in financial markets globally, and most diversified funds have seen declines in their value," Oxenford said.

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