The huge fund where Norway invests its oil revenues for future generations has recorded its best year ever. It grew by more than NOK 613 billion in 2009, thanks to a strong stock market, and still ranks as one of the largest pension funds in the world.
With an annual return of 25.6 percent last year, the oil fund now amounts to NOK 503,000 for every Norwegian, reports newspaper Aftenposten. Results from stock purchases when prices were low in 2008 have offset heavy losses in 2008, when the fund lost NOK 633 billion in value after stock markets fell.
“Values have recovered faster than we expected,” said oil fund chief Yngve Slyngstad.
The oil fund (formally called Statens pensjonsfond utland) has seen strong overall growth since it was established in the 1990s to set aside oil revenues for future generations. It quickly became known for trying to make ethical investments, and for taking a surprisingly active shareholder’s role for an institutional investor.
Earlier this year, for example, the Finance Ministry announced that the oil fund was selling off stakes in 17 companies that produce tobacco, to keep the fund in line with Norwegian health care and anti-smoking policies.
Even though the ethics council governing the fund has made highly public moves to dump stock in some controversial companies, it continues to have holdings in others, including some that have been accused of destroying rain forests, and supporting the dictatorship in Burma and Morocco’s occupation of the Western Sahara. Investments, for example, in eight oil and gas companies that work with the military junta in Burma have increased by nearly 40 percent, reports Aftenposten.
These are investments that seemingly defy Norwegian policy and thus can cast the country in a hypocritical role. An oil fund council spokesman said the criteria for dumping stock is quite strict and must, for example, involve severe environmental damage, but rain forest destruction could provide cause for exclusion.