By Gwladys Fouche
OSLO (Reuters) -Norway's $1.6 trillion wealth fund, the world's largest, posted a record profit of 1.2 trillion crowns ($109 billion) on Thursday for the first quarter of 2024, boosted by strong tech stocks and a continuing boom in artificial intelligence.
It was the fund's highest quarterly return in absolute terms since its creation in 1996 and compared with a profit of 893 billion crowns at the same time a year ago. The fund's relative total return was 9.1% in the January-March period.
"It is a remarkably strong quarter," deputy CEO Trond Grande told Reuters, adding that the return was driven by the world's top tech companies, dubbed "the Magnificent Seven", in particular NVIDIA (NASDAQ:NVDA) and Microsoft (NASDAQ:MSFT).
"For NVIDIA, it is making the hardware for AI," he said.
"(And for) other companies that are far ahead in looking at how they can apply this new technology, and of course monetise it, like Microsoft in the enterprise space and Meta Platforms in the social media space."
The fund invests the proceeds of the Norwegian state's oil and gas production into stocks, bonds, unlisted property and renewable projects abroad.
Its size is equivalent to $283,000 for every Norwegian man, woman and child.
'JITTERY'
Since the end of the first quarter, markets have been "a little bit more jittery", Grande said, given delayed expectations that the U.S. Federal Reserve and other central banks would cut interest rates.
The fund expected inflation to remain "a little bit more sticky than perhaps was anticipated".
"As long as you don't see the inflation moving closer to the banks' targets, rates are going to stay where they are - the short-term rates," Grande said.
Regarding the conflict between Iran and Israel, markets have been "somewhat muted" in their reactions, he said, perhaps as oil supply is now less reliant on Middle East resources given the growth in oil production from U.S. shale over the past two decades.
As of March 31, some 72.1% of the Norwegian wealth fund's assets were held in stocks, while 26.0% was invested in fixed income, 1.8% in unlisted real estate and 0.1% in unlisted renewable energy infrastructure.
The fund's overall return on investment of 6.3% was 0.1 percentage point below its benchmark index, it said.
A unit of Norway's central bank manages the fund, which owns 1.5% of all globally listed shares and has stakes in about 8,900 companies.
Separately on Thursday, the fund said it would vote in favour of a proposal letting NatWest (LON:NWG) buy back more of its stock from the British government, amid efforts to speed up privatisation.
($1 = 10.9966 Norwegian crowns)