The world's largest sovereign wealth fund returned 13.7% in 2017, in a year of "unusually strong markets," according to its annual report.
The 2017 return of the Government Pension Fund Global, Oslo, equates to a 1.03 trillion Norwegian kroner ($125 billion) gain — the highest ever return in the fund's local currency. In 2016, the fund returned 6.9%, equal to 447 billion kroner.
Since the sovereign wealth fund was formed at the beginning of 1998, the fund has returned an annualized 6.1%.
Assets grew 13.3% to 8.5 trillion kroner over the year ended Dec. 31.
At the end of 2017, 36% of the fund was invested in Europe, unchanged from figures at the end of 2016. Exposure in North America was 41%, down from 42.3%, while allocations to Asia and Oceania increased to 19.6% from 17.9% a year previous.
Emerging markets accounted for 10.1% of the fund's overall allocation, up from 10% as of Dec. 31, 2016.
The fund's 66.6% equity allocation gained 19.4% in 2017, compared with a return of 8.7% from a 62.5% allocation in 2016. The report said global growth accelerated in 2017, with equity markets strongest in Asia and some emerging markets.
A 30.8% allocation to fixed-income gained 3.3%, compared with a 4.3% return for a 34.3% allocation in 2016.
The remaining 2.6% was invested in real estate, which returned 7.5% in 2017. In 2016, the fund's 3.2% exposure to real estate gained 0.8%.
The kroner weakened against several of the main currencies in 2017, increasing the fund's value by 15 billion kroner. That compares to a 306 billion kroner loss in 2016. Fund withdrawals by the Norwegian government totaled 61 billion kroner in 2017, compared with 101 billion in withdrawals in 2016.
"The fund's cumulative return since inception has passed (4 trillion) kroner," said Yngve Slyngstad, CEO of Norges Bank Investment Management — which runs the assets of the fund — in a statement accompanying the report. He added that 2017 was "a very strong year for the fund."