[OSLO] Real estate and renewable assets are becoming more attractive in the face of stock market volatility, according to the head of Norway’s US$1.8 trillion sovereign wealth fund.
“The world is splitting into two and that means that we will probably see lower growth and we will see higher inflation,” Norges Bank Investment Management (NBIM) CEO Nicolai Tangen said in a Bloomberg TV interview at the fund’s office in Oslo on Tuesday (Apr 29). “The way to behave in the market now is just to be broadly diversified and very, very long term.”
The fund, which holds 53 per cent of all investments in the United States, aims to grow its position in the world’s biggest economy, even as US President Donald Trump’s trade war fuels concerns of a recession. This could include adding renewable projects, such as solar parks, the chief executive officer said.
The fund is today invested in a handful of onshore and offshore wind projects, as well as solar, in Europe, with a value of about 25.3 billion kroner (S$3.2 billion).
It made its first investment in 2021, when such investments were “very expensive, low yield, a lot of competition to get in because everybody was trying to make their portfolio a bit greener,” Tangen said. “So we did very little.” The situation is now “very different,” he added.
“They’re not particularly in favour, the potential returns are coming up, there is less competition and so we can make real investments here at good returns,” he noted, “in Europe and potentially in the US.”
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When it comes to real estate, NBIM already owns about 25 per cent of Regent Street in London and has big holdings in Manhattan, Tangen explained. “Relative to the stock market, these things start to get be pretty attractive,” Tangen said, adding the fund prefers prime properties. “You had kind of a perfect storm with everything from Covid to working from home, to regional bank uncertainty and so on, in the US.”
The executive has sought to boost the profile of the fund at home and abroad, in part because he says that Norwegians should understand how their money is being invested. This includes hosting an annual investment conference in Oslo, with this year’s guest-list featuring CEOs like Goldman Sachs Group’s David Solomon, Ferrari’s Benedetto Vigna and Lars Fruergaard Jorgensen of Novo Nordisk.
NBIM is the world’s biggest single owner of public equities, with shares in over 8,600 companies globally. It was established in the 1990s to invest Norway’s oil riches and is largely an index-tracker, working according to a strict mandate from the country’s Finance Ministry.
The fund last week reported its biggest loss since the third quarter of 2023 in what was a turbulent period for markets globally. The decline was largely caused by a drop in the value of technology companies, it noted.
“We think that if you have a proper fragmentation of the world, there could be 35 per cent to 40 per cent downside in markets,” Tangen said. On the outlook for tariffs coming down, “there is one guy who knows and it’s not me,” the executive added. BLOOMBERG
