Invest Like Norway

Discover the Secrets Behind Norway's Sovereign Wealth Success and How You Can Apply Them to Your Portfolio

Typically associated with stunning Fjords, Vikings and the Northern Lights, Norway might not be the first place you look for investment inspiration. However, when it comes to institutional investing on a global scale, few entities do it better than Norway’s Oil Fund.

In this article, we will look at how Norway uses savvy investment strategies to avoid the dreaded ‘Oil Curse’ and how you can invest like Norway.

First, some background.

What is The Norway Oil Fund?

In a nutshell, the Norway Oil Fund also known as the Government Pension Fund Global, is Norway’s solution to protecting its economy from fluctuating oil income.

The global oil market is famously unpredictable, and many countries have fallen foul of over-reliance on oil revenues, economic instability due to price crashes, and poor resource management, leading to boom-and-bust cycles and financial crises. A phenomenon nicknamed the Oil Curse.

Norway has avoided the Oil Curse by carefully managing its oil wealth through the Government Pension Fund Global. The majority of the country’s oil income is invested for the long term rather than being spent immediately. Instead of relying on revenue from oil, Norway invests in a diversified global portfolio, including stocks, bonds, and real estate.

This approach has been so successful that, since it was established in 1990, this sovereign wealth fund has grown into the largest of its kind globally, surpassing US$1.74 trillion in assets. The equity portfolio within the fund has an annualised return of 7.01% over the last 25 years.

“It is the world’s largest single investor.”

What Makes Norway’s Oil Fund So Successful?

Finding oil may seem like an excellent solution to money worries, but it is important to remember that oil can, and will, eventually run out. When this happens, any countries that rely on their oil income could face serious economic problems, such as a loss of revenue, unemployment, and financial instability.

What makes Norway’s Oil Fund so crucial is that it serves as a financial reserve and long-term savings plan so that both current and future generations of Norway get to benefit from its oil wealth even if the oil runs out (projected to be in 69 years’ time when excluding unproven reserves).

How Norway Invests

Long-Term Perspective

Rather than seeking short term profits, Norway’s Oil fund prioritises sustainable growth, focusing on investments that will provide steady returns over many years.

Why this works: This approach helps safeguard the country’s economy from short-term volatility and ensures that the fund will continue to grow and support Norway even after oil resources are depleted.

Global Diversification

The fund is highly diversified, with investments in over 9,000 companies across more than 70 countries. On average the fund owns 1.5 percent of all listed companies.

Instead of putting all its money into one industry or region, Norway spreads its investments across stocks, bonds, real estate, and other assets.

Why this works: Norway’s Oil fund carefully balances risk and return by following strict investment guidelines. The fund diversifies globally and avoids overly concentrated investments, while still looking for opportunities that offer solid returns over the long term. This ensures that the fund remains stable and resilient, even during economic or industry downturns

How You Can Invest Like Norway

Though it’s unlikely that you have an oil field yet to be discovered at the bottom of your garden, it is possible to replicate Norway’s fund methods to benefit your savings, family investment and multigenerational wealth management.

“Norway’s success comes largely from a passive, globally diversified investment approach designed by some of the most experienced and qualified finance brains in the world.

This approach is as suitable for you - the private individual - as it is for the world’s biggest investment fund.”

To invest like Norway:

1. Think Long-Term

Focus on strategies like euro-cost averaging and compounding returns.
Emphasise patience rather than over reacting to short-term market fluctuations.
The goal here is to let investments grow steadily over time without the temptation for short term speculation

2. Diversify Globally

Avoid putting all your eggs in one industry, region, or asset type.
Instead, build a diversified portfolio across multiple sectors and geographies to reduce risk.
Use ETFs and index funds to access a broad and globally diversified exposure.

3. Keep Custody, Investment Management and Execution Fees Low

By ensuring less of your wealth is paid away fees, more of your money is available to compound at a higher growth rate.
Work with an informed advisor who can help you identify and mitigate opaque industry fees and hidden charges.
Avoid costly traditional fund management structures, 93% of which underperform their benchmark (S&P SPIVA scorecard 2023).

4. Stay Disciplined

Norway uses a clear framework to make investment decisions, staying focused on its long-term goals and avoiding emotional reactions to market swings. This discipline mirrors the importance of creating a personal financial plan, which helps you outline your financial goals, risk tolerance, and investment strategy, keeping you on track even during market volatility.

By investing like Norway, you can ensure long-term financial security and stability, just as the country has done with its Oil Fund.

Focusing on a long-term perspective, diversifying globally, keeping costs low, and staying disciplined are all key strategies to preserve and grow wealth successfully. By applying these principles to your own investments, you can create a strong, resilient portfolio that can withstand market fluctuations and grow steadily in inflation adjusted terms.

To learn more about how you can incorporate Norway’s investment style into your financial plan, contact us today on
01 919 8960 or book in for a coffee with one of our Advisors.

We are happy to offer you our time without obligation to meet for a coffee where we will discuss and analyse your current arrangements and whether they are appropriate for your goals.