AUM Soars Amidst Market Volatility
The Government Pension Fund Global’s total assets under management reached 19,742 billion kroner at the end of 2024, a significant increase from 15,757 billion kroner a year prior. This growth was primarily fueled by a strong equity market, particularly in US tech stocks, and a weaker krone. The fund’s value increased by 3,985 billion kroner in 2024, marking the largest increase in krone terms in its history. (Source: Government Pension Fund Global Annual Report 2024, page 4, 13)
Equity Allocation Dominates, Tech Leads Returns
As of December 31, 2024, equities constituted 71.4% of the fund’s market value, up from 70.88% at the end of 2023. The equity portfolio returned 18.2% in 2024, driven by solid corporate earnings and optimistic growth expectations. Technology stocks were the top performers, returning 35.1%, largely due to demand for AI-based solutions and semiconductor suppliers. Financials followed with 27.8% return, and consumer discretionary with 19.3%. The fund was invested in 8,659 companies at year-end 2024, a decrease from 8,859 companies a year earlier, primarily due to ongoing portfolio adjustments by internal and external managers. The largest positive contributions came from NVIDIA Corp, Apple Inc, and Amazon.com Inc. (Source: Government Pension Fund Global Annual Report 2024, page 4, 7, 8, 22, 23, 107)
Fixed Income Sees Modest Gains Amidst Rate Shifts
Fixed income investments returned 1.3% in 2024. Government bonds, comprising 60.2% of the fixed income portfolio, returned -0.1%. US Treasuries returned 3.4%, while Euro-denominated government bonds returned -2.1%. Corporate bonds, making up 24.8% of the fixed income portfolio, returned 4.8%. The bond portfolio’s share of the fund was 26.6% at year-end 2024, down from 27.1% at year-end 2023. (Source: Government Pension Fund Global Annual Report 2024, page 8, 26, 27, 107)
Real Estate Portfolio Shifts and Acquisitions
Real estate investments returned 4.8% in 2024, comprising 3.7% of the fund. Unlisted real estate returned -0.6%, while listed real estate returned 9.9%. Unlisted real estate investments had a market value of 364 billion kroner at year-end, equivalent to 1.8% of the fund, primarily in office, retail, and logistics properties. The fund acquired an 80% interest in Trinity Tower in Paris La Défense in 2024. Additionally, the fund acquired a portfolio of seven logistics properties in Germany, Italy, Spain, and the UK in partnership with Prologis. The management mandate sets an upper limit for unlisted real estate investments at 7% of the fund’s value. (Source: Government Pension Fund Global Annual Report 2024, page 8, 29, 30, 103)
Renewable Energy Infrastructure Faces Headwinds, New Commitments Made
Investments in unlisted renewable energy infrastructure returned -9.8% in 2024, making up 0.1% of the fund. The negative return was primarily due to a higher cost of capital. The fund made four new investments in unlisted renewable energy infrastructure during the year. In January 2024, an agreement was signed to acquire a 49% interest in a portfolio of solar and onshore wind assets in Spain and Portugal for 307 million euros (approximately 3.5 billion kroner). In April 2024, an agreement was made to acquire a 49% stake in two solar projects in Spain for 203 million euros (approximately 2.4 billion kroner). Also in April 2024, an agreement was signed to acquire 37.5% of Race Bank, an operational offshore wind project in the UK, for 330 million pounds (approximately 4.5 billion kroner), including a debt facility of approximately 644 million pounds (approximately 8.8 billion kroner).
In August 2024, the fund committed 900 million euros (approximately 10.6 billion kroner) to Copenhagen Infrastructure V (CI V), the fifth flagship fund from Copenhagen Infrastructure Partners (CIP). CI V will focus on offshore wind, onshore wind, solar, power networks, and storage, with investments spread across North America, Western Europe, and developed markets in Asia Pacific. The management mandate sets an upper limit for investments in unlisted renewable energy infrastructure at 2% of the fund’s value. (Source: Government Pension Fund Global Annual Report 2024, page 8, 34, 35, 103)
External Manager Contributions and Mandates
In 2024, the overall contribution from security selection was negative, with external management making a positive contribution, but internal management’s negative contribution being larger. The fund had 276 individual equity and bond mandates at the end of the year, with 114 assigned to external equity managers. External managers are primarily used for equity investments in emerging markets and for investments in small- and mid-cap companies. From inception in 1999 until the end of 2024, the cumulative excess return after costs from external equity mandates was approximately 92 billion kroner. (Source: Government Pension Fund Global Annual Report 2024, page 9, 41, 71)
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