Last year’s Norway's sovereign wealth fund's return on investment amounted to almost $34,000 for each of its 5.3 million citizens, and the overall value of the fund is now equivalent to about $207,000 for every man, woman and child.
Most of us live in countries where the ups and downs of politics, and the nation's finances, have a direct impact on our lives. But, in Norway, it's residents can relax in the knowledge that the government has the funds to look after everybody. And it does.
Many countries have fabulously wealthy sovereign funds, but they are rarely distributed fairly and equitably across its population. Norway is an exception, and a shining example of how to put good luck to good use.
Norway’s sovereign wealth fund, the world’s largest, made a 19.9 percent return on investment in 2019, earning a record 1.69 trillion Norwegian crowns ($180 billion). The fund holds stakes in more than 9,000 companies globally, owning, on average, 1.5% of all listed stocks. However, it doesn't invest in companies that breach its ethical guidelines, such as tobacco, munitions and weapons, or any company with a dodgy humanitarian record.
The fund, which invests revenue from its oil and gas industry on behalf of its people, is now worth three times Norway’s annual gross domestic product, and its returns provide vital funding for the country’s extensive welfare state. Providing individual ever-growing 'wealth' for its citizens.
Norway’s oil fund, or the Government Pension Fund Global which is its official name, was created after the country discovered oil in the North Sea. The fund was presciently set up to shield the economy from the ups and downs in oil revenue. Witness today's oil price! It also serves as a financial reserve and as a long-term savings plan so that both current and future generations get to benefit from its oil wealth.
In 1969, one of the world’s largest offshore oilfields was discovered off Norway. Suddenly the Norwegians had a lot of oil to sell, and the country’s economy grew dramatically. It was decided early on that revenue from oil and gas should be used cautiously in order to avoid imbalances in the economy. In 1990, the Norwegian parliament passed legislation to support this, creating what is now the Government Pension Fund Global, and the first money was deposited in the fund in 1996. As the name suggests, it was decided that the fund should only be invested abroad.
Rather than splurging their new oil wealth - which the UK did with its North Sea oil discoveries - the Norwegians harvested the benefits of their good fortune and invested it for the security of future generations. Even the Arab states, with their vast oil fields, don't have sovereign wealth funds to match Norway's. And Norway certainly wouldn't pump cash into buying up Premier League football clubs!
So, if you're lucky enough to live in Norway, you'll know that you, your children and your grandchildren are almost certainly financially secure and will be comfortably looked after by the state, if necessary. Surely that's the finest definition of wealthy?