Norway wealth fund slightly cautious on equities, tech companies

Norway's $2.3 trillion sovereign wealth fund said it had been "slightly cautious" on the equity markets and ‌some of the larger Big Tech companies after it reported a loss of 278 billion crowns ($29.7 billion) for the third quarter on Thursday. Investing the Norwegian state's revenues from oil and gas production, the fund owns on average 1.5% of all listed companies globally, making it the world's largest ‌single investor.

"We have been public that we have been a little bit cautious on the equity market overall and a little bit ‌cautious on some of the bigger technology names," Deputy CEO Trond Grande told Reuters after the results. "In the bigger scheme of things, that's just smaller underweights." The fund must follow a benchmark index set by the finance ministry, with equities tracked against the FTSE Global All Cap index, meaning it has a small margin of manoeuvre ⁠to deviate from ​that index and go underweight ⁠or overweight on some stocks.

The fund's return underperformed the benchmark by 0.18 percentage point in the quarter. Grande said the fund had been slightly underweight on some tech ⁠stocks for "quite a while" and had no plans, for now, to change. The tech sector as a whole accounted for 23% of the fund's total holdings ​as of June 30, according to fund data.

"We are happy with how we have the fund structured just now ... ⁠but this is something that we constantly review. So nothing is carved in stone," he said. Overall, there had been quite "a lot of volatility" in the ecosystem of AI ⁠stocks, ​ranging from model labs and data centres to the energy providers and the chip manufacturers, he said.

"Should there be a backlash or should there be an accident that kind of holds back the penetration of the technology, that certainly would hurt the equity ⁠market," he said, adding he would not describe the risk to markets as systemic. In the third quarter, the fund posted a ⁠return of minus 0.5% on its global ⁠investments due to rising interest rates hitting its fixed-income portfolio, which accounted for 25.8% of its overall holdings in the period.

Overall, the fund is invested in some 7,100 companies as well as bonds, property ‌and renewable energy ‌projects. ($1 = 9.3582 Norwegian crowns)