Norway's Oil Empire

Hi, today we explore: Norway's world-influencing sovereign wealth fund. TOGETHER WITH Today's Topics Hello and Happy Sunday! What would you do with an unexpected windfall? Would you spend it all in a spectacular splurge, or stash it in a savings account straight away? A similar question fell to the government of Norway some 60 years ago, after finding the oil equivalent of a lottery ticket in the North Sea — a discovery that formed the foundation of what is now one of the world's largest, and most influential, wealth funds. This Sunday’s Chartr is sponsored by [Brilliant]( the learning platform designed to help you get data-smart in minutes a day. Brilliant are data-lovers through and through, with a learning method backed by data and a stunning library of lessons on [data science, math, and more.]( [Read this on the web instead]( Norway's conclusion to the question in the introduction of today's newsletter — to funnel some of this rush of oil revenue into a sovereign wealth fund — has little competition on the list of “best financial decisions of all time”, as the fund’s assets have ballooned to over $1.4 trillion. That puts Norway's sovereign fund at a similar size to that of China's — yes, the same China that has more than 260x as many people as Norway has. A sea of money In 1963, Norway’s government declared sovereignty over the Norwegian Continental Shelf — an area of the world that, until the late 1950s, most states had overlooked as a potentially rich source of oil. When drilling started just [a few years later]( Norway found itself awash with black gold and the government immediately began debating how to ensure fiscal flexibility should petroleum prices falter, its economy crumble, or oil supplies eventually run dry. To guarantee that its current and future citizens would benefit from this new-found wealth, the state wanted to use the money to invest in the long-term while making sure it could be drawn on “[when required]( — thus establishing the Government Petroleum Fund in 1990. In 1996, the first cash was transferred into the Petroleum Fund — or the Government Pension Fund of Norway, as it later became known. Golden gås By the end of 1998, the pot had amassed just shy of 172 billion kroner, or $23 billion. However, since then, the fund has grown exponentially as the oil money was poured into a smörgåsbord of investments, from real estate and government bonds to equity investments in thousands of companies. Returns on those wide-ranging investments — which now make up the bulk of the fund, with less than a third of the total coming from [government inflows]( — have seen the fund's value rise to world-influencing levels, with $1.02 trillion tied up in global equity investments. It’s hard to wrap your head around what one trillion dollars worth of stock market investment actually looks like. To put it into perspective: Norway, with just ~0.07% of the world’s population, owns a staggering 1.5% of the global stock market through investments in more than 9,000 listed companies across 70 countries. The Oslo portfolio Because of its size, Norway’s fund looks a lot like a diversified market index, with considerable slices of every major sector. After a record $164 billion loss last year, as inflation and geopolitical tensions shook the wider market, Norway’s tech holdings, helped the fund return 10% in the first part of this year, with AI-driven rebounds for companies like Meta and Microsoft propelling the pot’s $143 billion [bounce-back](. Interestingly, just ~4% of the fund is tied up in energy stocks — a modest underweighting compared to many global markets, perhaps because the country is already substantially exposed to the oil sector. Indeed, Norway’s fund is increasingly setting investment policies that encourage companies to reduce, or at least disclose more transparently, their carbon emissions. The irony (or hypocrisy) of an oil-backed fund setting the pace on corporate environmental policy is [not lost on many]( even as Norway continues to lead the world on green initiatives, like electric vehicle adoption. Oilfluence Oil exports have played a huge role in developing Norway’s robust welfare state, as well as evening out inequality and generally improving the standard of state institutions. Indeed, according to the [NBIM]( the Pension Fund accounts for 20% of the Norwegian government’s budget, and is worth $250k+ for each Norwegian citizen at the time of writing — helping Norway to become one of the most prosperous nations on the planet. [Sponsored by Brilliant]( Data says: there’s a smarter way to get smarter Data, coding, and problem solving skills — they're essential these days. But finding time to learn them? Not so easy. That’s why [Brilliant’s bite-sized lessons]( level up your mental toolkit in just minutes per day. With [Brilliant]( learning becomes interactive — which is proven to be up to 6x as effective as watching videos. Combine that with [Brilliant]( personalized learning paths, and you can master big concepts in data science, math, computer science, and more in no time. There’s a reason Chartr has been partnering with [Brilliant]( for more than 2-and-a-half years — because it’s an app we love, that lets you level up for the future, unlocking data skills that are hard to learn any other way. Join 10m+ people on Brilliant. P.S. Chartr readers can save 20% on a Brilliant annual subscription and [try it free for 30 days](. [Sharpen your mind the smart way, with Brilliant]( Norse code The Human Development Index (HDI), devised by the [United Nations Development Programme]( is a summary measure that ranks countries based on key standards of living. Data from 2021 placed Norway in 2nd, with an HDI of 0.961, with Norwegians enjoying some of the longest lives (life expectancy at birth of 83.2 years), average schooling of 13.0 years, and a Gross National Income (GNI) per capita of ~$65k. Norway’s 2021 HDI is some 12.8% higher than when the report began in 1990. Back then, GNI for Norwegians was nearly half what it is now — only $36,063 per capita, adjusted for inflation — coincidentally aligning with the creation of the Pension Fund. Scandinavian success Norway’s Scandinavian neighbors rank similarly highly. The annual [World Happiness Report]( has named Finland the happiest country in the world for the past [6 years]( and it’s only ever missed out to Norway, Denmark, or Switzerland for the spot since the report began. Interestingly, Finland has almost [no known fossil fuel resources]( suggesting that Norway’s development is perhaps less to do with oil, and more to do with broader Scandinavian ideals, with terms like [‘koselig’]( (Norwegian) and ‘hygge’ (Danish) having been exported globally, as the benefits of the snug, nature-filled culture adopted by many Scandis purportedly plays a part in their general happiness and health. Late bloomer Having forayed into oil relatively late, few could have predicted the massive impact that the booming industry would have on the country’s economy. Today, Norway ranks as the 10th largest exporter of oil, and the country supplies up to 25% of the EU’s [gas demand](. Norway now grapples with a [conundrum]( in many of its domestic political issues — if you have $250k+ in a pot for every single man, woman and child in your entire country, how do you spend it? That’s a problem most would love to have — which is why more and more countries are setting up their own versions, with the [Philippines']( launching one in July. [Sponsored by Brilliant]( Learning doesn’t happen by chance — it happens with Brilliant Want to master essential, in-demand data skills but not sure where to start? We've been there — and the absolute best way we’ve found to sharpen your data skills is with [Brilliant](. Learning with [Brilliant]( feels different. Why? The data-backed method teaches you data science, math and even programming in an interactive way, and helps you build a daily habit. [Brilliant]( bite-sized lessons are ready when you are, and done in just minutes. [Try it free for 30 days]( — Chartr readers get 20% off Brilliant premium. Like this deep dive? Let us know! Got ideas for charts? Hit reply and send us your topic ideas, we'd love to hear from you. [Read or share this story on the web]( *Sponsored content from Brilliant. Thanks for reading. See you tomorrow, when we return to our regular scheduled programming! Have some [feedback](mailto:daily@chartr.co?subject=Feedback&body=Hi%2C%0A%0AI%20like%20the%20newsletters%2C%20but%20I%20had%20a%20thought%20for%20you...) or want to [sponsor]( this newsletter? Not a subscriber? Sign up for free below. [Subscribe]( Copyright © 2023 CHARTR LIMITED, All rights reserved. You are receiving this email because you opted in via our website. 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