* Fund grows by about $100 bln in a year
* Sells French, UK govt debt, buys Mexico, Japan
* European holdings 48 pct in 2012 vs 53 pct in 2011
* Equity holdings rise above 60 percent
By Joachim Dagenborg and Balazs Koranyi
OSLO, March 8 Norway's sovereign wealth fund,
one of the world's biggest investors, grew by around $100
billion in 2012, sealing one of its best years on record as it
benefited from the striking upturn by stock markets.
Known as the 'oil fund', it invests revenue from Norway's
lucrative oil industry for the country's future. It is now worth
around $710 billion, 40 percent more than the value of the
entire Norwegian economy.
The fund has been steadily reducing its assets in Europe as
part of a long-term plan to move into both emerging and
developed markets in Asia and the Americas - where it sees the
strength of the world's economy in the years ahead.
At the end of last year it sharply cut its holdings of bonds
issued by the government of Britain and France, two countries
struggling to reduce debt levels while their economies stutter.
But big gains in stock markets last year after major central
banks acted to underpin their economies helped the fund return
13.4 percent in 2012, the second best performance since it
started operating in 1996.
The fund lost 2.6 percent overall in 2011.
"The fund's good performance is largely the factor of a good
run on the stock markets," Yngve Slyngstad, its chief executive
Managed by Norway's central bank, the fund cut its exposure
to Europe to 48 percent of its total portfolio last year from 53
percent. Instead, it put more into countries such as South
Korea, Mexico, Australia and Japan, it said on Friday.
The fund reduced its holding of British government debt by
13 percent in the fourth quarter. French government debt
holdings fell by a quarter.
It lifted its share of Italian government debt to 26.5
billion Norwegian crowns from 24.8 billion, although this
reflects a period prior the uncertainty caused by recent
inconclusive elections in that country.
The fund also more than quadrupled its holding of Australian
SOLD APPLE, BOUGHT HSBC
It earned close to 30 percent on investments in the
financial sector, which also had the biggest weight in its
portfolio with 23 percent. Consumer goods, the second biggest
segment within its share portfolio, also returned a hefty 24.5
Meanwhile, in poorly performing sectors, such as utilities
and telecommunications, it only had a minimal exposure.
With the good mix, the fund's stocks earned it 0.5 percent
above its benchmark, its best performance in years.
Among its top investments, it reduced its holdings in Apple
by a fifth, or around $911.60 million in three months
and also sharply cut its stakes in Vodafone, BG Group
However, it sharply boosted its exposure to firms such as
HSBC and BlackRock.
Slyngstad declined to predict how the fund would invest in
2013 but said he could not rule out it would return to Europe's
most troubled economies, like Greece, Portugal and Ireland,
where its current exposure is now minimal.
A Reuters poll of leading investment houses in February
indicated that a small majority investors believe the U.S.
dollar will be the best-performing major currency this year.
The oil fund is expected to grow to $1.1 trillion by 2020
and record investments into Norway's petroleum sector indicate
plenty more income to invest beyond the end of the decade.