Norway’s Oil Fund In for Inevitable Fall Amid Turbulent Times to Come, Its Chief Exec Says

Norway's Oil Fund, the largest of its kind, manages revenues from Norway’s oil and gas resources to maximise the benefits for the living and future generations. To achieve this, investments are spread across markets, countries and currencies to guarantee broad exposure to global growth and value creation, and ensure risk diversification.

There are turbulent times ahead in the global capital market, Norway’s Oil Fund chief executive Nicolai Tangen has argued, venturing that it's “inevitable” that the fund will fall in value for a long time.

“There is a lot of risk in the capital market. Inflation is rising, and interest rates too. This is negative for both interest rates and equities. I think we could have turbulent times ahead. Then, the value of the fund will go down. This can also last quite a long time,” Tangen told the economic news portal E24.

The Government Pension Fund Global, known colloquially as the Oil Fund, has risen considerably in value in recent years. As of today, the value is over NOK 11.6 trillion ($1.37 trillion). However, a fall in value in the time ahead is inevitable, Tangen argued, urging instead to adapt.

“I do not think there is anything to do about it. We just have to deal with this. As a portfolio manager, you adapt to the world. We have to ride the wave,” Tangen said.

Despite worries that the value of the Oil Fund will go down, Tangen also emphasised that this is part and parcel of the job of managing the fund.

He stressed that the economy tends to fluctuate, which, he argued, most people understand.

“What impresses me about Norwegians is their understanding that things go up and down. This goes back a long way back in our history. We have been involved in many cyclical markets… We are tolerant of fluctuations,” he said, concluding that Norwegians are likely to invest in a weakened oil fund in the years to come.

The self-professed aim of the Oil Fund, the world's largest, is to ensure responsible and long-term management of revenue from Norway’s oil and gas resources, so that this wealth benefits both current and future generations.

To achieve this, the fund has a small stake in over 9,000 companies worldwide, including giants such as Apple, Nestlé, Microsoft and Samsung. On average, the fund holds 1.4 percent of all of the world’s listed companies. Investments are spread across most markets, countries and currencies to achieve broad exposure to global growth and value creation, and ensure good risk diversification.