Author: Kari Lundgren
Article: Original article
Publication date: Thursday, December 8, 2022
The chief of Norway’s $1.3 trillion sovereign wealth fund Nicolai Tangen wants his traders to bet against the market.
On Thursday, the world’s biggest owner of publicly traded companies, possessing about 1.3% of all stocks in the global markets, presented his three-year plan of stemming this year’s losses that were worsened by rapid inflation and interest rates increase. The fund is – for the first time in its history – looking into the future, in which investments bring only part of the yields it’s used to see.
Tangen, who repeatedly called for preparing to “very low returns,” underlined the importance of excess returns.
Tangen said that the key for yield increasing would be to make the fund take more long-term actions and be more active about divestment from certain assets. It means, in his opinion, that there are many things the fund isn’t willing to have. Still, he didn’t give more details.
The fund warns about a prolonged downturn in the markets, after achieving an average return of 6% over the quarter of a century of its existence. Over the third quarter, it lost 4.4%, or about $43 billion.
Tangen also noted that in the changing world, it’s necessary to invest in a longer term, and choose the assets wisely, as by doing so, one can get more possibilities to do the opposite to everybody else, according to his point of view.
As it was also stated, openness and transparency remain highly important to provide the Norwegians with understanding why their fund doesn’t grow as fast as before.
Forecast: a midterm decline of the S&P 500 is likely to happen