Norway’s Govt Pension Global, world’s largest sovereign fund, raised India bets to $22 b in CY23

Norway’s Government Pension Fund Global, the world’s largest sovereign wealth fund with a portfolio value in excess of $1.4 trillion, raised its India bets last year amid a surge in Indian equities.

Its Indian holdings as a percentage of its total equity portfolio rose by 20 basis points (bps) year-on-year in calendar year 2023 to 2.2 per cent, the fund’s annual disclosures show. Considering a total equity portfolio of about $1 trillion, the fund’s India equity investments amount to about $22 billion.

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The increase in India weight came in a year that saw net purchases by foreign portfolio investors (FPIs) to the tune of over $20 billion. India's benchmark index Nifty 50 rose 20.1 per cent in CY23.

India has the second largest weight in its emerging market portfolio after China, whose weight reduced by 70 bps last year to 3.1 per cent. The India weight in the fund’s equity portfolio stood at 1.6 per cent at the end of CY21, implying a rise of 60 bps in the last two years.

ICICI Bank and Infosys were the top two India holdings for the fund, with a market value of more than ₹7,000 crore each at the end of CY23, data from Primeinfobase (Corporate Database Information) shows. Some of the other top holdings include Axis Bank (₹6,416 crore), Varun Beverages (₹3,976 crore) and M&M (₹3,184 crore). The top 10 investments amount to a market value of ₹40,911 crore.

Emerging markets accounted for 10.2 per cent of the fund’s equity investments, lower than the 10.9 per cent at the end of CY22.

The fund’s equity portfolio returned 21.3 per cent in 2023. The fund was invested in 8,859 companies at the end of 2023, down from 9,228 a year earlier.

“Despite strong inflation, rising policy rates and geopolitical turmoil, the stock market rallied after a weak 2022. Higher interest rates reined in inflation during the year without sparking a sharp economic downturn. US technology stocks in particular contributed to the positive return, driven mainly by the largest technology companies,” the fund’s annual report said.

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Technology stocks were the best performers in 2023 with a return of 51.9 per cent. The fund’s top holdings include Microsoft ($33 billion), Apple ($31.3 billion), Alphabet ($18.1 billion), Amazon ($16.4 billion) and NVIDIA ($13.5 billion).

The fund has 70.9 per cent invested in equities, 27.1 per cent in fixed income, 1.9 per cent in unlisted real estate and 0.1 per cent in unlisted renewable energy infrastructure.

India’s market cap is currently the 5th largest globally but India’s weight in global indices is still low at 1.6 per cent. This should change as market free float rises and some weight anomalies get sorted out, according to Jefferies. India will become nearly a $10 trillion market by 2030 -- impossible for large global investors to ignore, the brokerage said in a recent note.

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