Sovereign wealth funds: Norway tops world ranking, but two powers threaten its leadership

The latest global ranking of sovereign wealth funds shows that Norway's "Norway Government Pension Fund Global" continues to lead with more than u$s1.75 trillion, closely followed by two Chinese, the "China Investment Corporation" with more than u$s1.33 trillion and the "SAFE Investment Company" with almost u$s1.1 trillion, which are close on its heels. These major players in the global market are not only increasingly influential, but are also being replicated by more governments, states and organizations. That is why it is not surprising that among the first executive orders signed by U.S. President Donald Trump, he surprised with one that will allow the creation of a sovereign wealth fund that would be operational in 2026. Perhaps the U.S. president or someone in his entourage saw how these market giants are steadily advancing and, in addition, generating a flow of profits such as that recorded by the Norwegian fund in 2024 of u$s235,000 million.

After signing the executive order, Trump entrusted the task of setting up the sovereign wealth fund to the Secretaries of the Treasury and Commerce, Scott Bessent and Howard Lutnick, respectively. Lutnick even went so far as to point out the possibility of using the fund to purchase TikTok, which currently operates in the US thanks to an extension signed by Trump that extends the deadline for a forced sale or a shutdown. For his part, Trump slipped that large companies and Wall Street could advise this entity on the investments to be made generating great expectation, above all, in the main investment banks. It should be noted that this type of funds are not alien to the USA, where there are already several of this type, but they are state-owned, such as the Alaska fund, which started in 1976 and manages assets worth more than u$s80,000 million, while the North Dakota fund deposits 30% of the oil and gas taxes in its own fund every month and has a portfolio of u$s11,500 million. Former Democratic President Joe Biden also had a similar project in mind to finance projects related to national security, such as the technology, energy or logistics sectors, but it never materialized.

History shows that in 1953, the Kuwait Investment Authority became the world's first sovereign wealth fund, designed to manage the country's excess oil wealth, and since then, numerous funds have been created, with the world's 100 largest funds holding nearly $14 trillion in assets. Sovereign wealth funds are large pools of money managed by governments that are often resource-rich, such as Saudi Arabia and Kuwait. They may also hold large foreign exchange reserves, such as China and Singapore. These numbers also serve to dimension the prominence of the world's largest investment fund, BlackRock, which manages a portfolio similar to those of the world's top 100 sovereign wealth funds, with the top ten managing some u$s10 trillion in combined assets.

A profit equivalent to almost 40% of Argentina's GDP.

In this regard, a few days ago, the Norwegian sovereign wealth fund announced its performance last year, in which it earned the equivalent of almost 40% of Argentina's GDP, thanks to the good performance of US technology stocks, in particular Apple, Microsoft and Nvidia. Thus the Norwegian Government Global Pension Fund under management of Norges Bank Investment Management (NBIM) confirmed that it remains the world's largest sovereign wealth fund. "The fund achieved very good returns in 2024 as a result of a very strong stock market. In particular, U.S. technology stocks performed very well," explained Nicolai Tangen, CEO of the Norwegian fund. For its part, NBIM explained that the return on equity investments was 18%, and that of fixed-income investments was 1%, while unlisted real estate investments showed a negative return of 1%. On the other hand, he noted that the performance of unlisted renewable energy infrastructure was also negative, at around 10%. "The fund's performance was 45 basis points lower than the benchmark." The fund was worth 19.742 trillion kronor as of December 31, 2024, which is equivalent to more than $1.75 trillion, something like more than three GDPs of Argentina.

Regarding the investment portfolio, NBIM indicated that 1.4% of the fund was invested in equities, 26.6% in fixed income, 1.8% in unlisted real estate and 0.1% in unlisted renewable energy infrastructure. NBIM deputy managing director Trond Grande argued that 2024 was a "very, very strong year for equities" and stressed that returns had been driven by certain sectors, particularly as a result of a boom in technology stocks. "Technology has been really strong, driven by Artificial Intelligence (AI), and also financials because interest rates have been higher for longer," he noted. He also referred to the breakout of Chinese startup DeepSeek: "The fact that there are now cheaper language models available is positive, it's positive for the democratization of artificial intelligence, so there should be more penetration of that technology around the world when the cost is lower, so that's positive overall." "I think the development of DeepSeek was a surprise to everybody, otherwise you wouldn't have seen those market reactions," he added.

Trump's fund targets

In relation to the US it is worth remembering that Trump during the presidential campaign had mentioned the idea during a speech at the Economic Club of New York, where he proposed channeling money from tariffs into a wealth fund that could invest in manufacturing, defense and medical research centers. "We will create America's own sovereign wealth fund to invest in great national endeavors for the benefit of all the American people," Trump said at the time and suggested that Wall Street leaders and corporations at that event might have a role to play, helping to "advise and recommend investments." There was even talk, or rather, speculation, that Greenland would be another target of the fund launched by Trump. We shall see.