Norway's Giant Sovereign Wealth Fund to Stay the Course With US Exposure
Norway’s $2.1 trillion sovereign wealth fund, the world’s largest, will continue to invest about half its assets in US equities despite the economic fallout from the Iran war, Norwegian Finance Minister Jens Stoltenberg said at Semafor World Economy.
“We plan to continue to be a big investor in US companies and to have roughly half of our investments there, because the American stock market is so dynamic and reflects the strength of the US economy,” he said in Washington, DC on Wednesday. “But it makes us of course concerned when we see the consequences of the war in the Middle East, with increased energy prices that can increase inflation and push down growth.”
Stoltenberg, a former secretary-general of NATO, said he believed tensions over the US-Israeli war on Iran wouldn’t prompt the US to leave the Atlantic alliance, as President Donald Trump has threatened to do on several occasions. “The NATO alliance faces some severe problems and challenges. There’s no way to hide that,” he said, adding: “We have been able to overcome disagreements before, and I really hope and believe that we can do that again.”
He nevertheless criticized Trump for failing to consult US allies prior to his decision to attack Iran. “He’s not wrong in saying that NATO has not contributed actively to that military operation,” he said. “But if you want NATO to contribute then at least you have to sit down with NATO allies as you did after 9/11,” he said, in reference to the involvement of NATO troops in Afghanistan following the 2001 attacks.
Even though I fully agree with his views on Trump and NATO, I will leave that aside and focus on what the Norwegian Finance Minister Jens Stoltenbergsaid about staying the course with their US investments.
The world's largest sovereign wealth fund remains committed to US assets, which shouldn't surprise us.
Have a look at their asset mix and geographic exposure, which is available here:
As you can see, 53% of the assets are in the United States, mostly in US equities where the Fund has a healthy exposure to US megacap tech stocks given their weighting in the S&P 500.
That US and global equity exposure allowed Norway's Government Pension Fund Global to gain 15.1% in 2025, a stellar performance even if it too underperformed its benchmark by 28 basis points (no big deal).
What is interesting is that for a small oil-producing country, Norway thought things through properly years ago, and decided to set up a sovereign wealth fund in 1996 to properly diversify and build generational wealth.
Moreover, apart from being the world's largest sovereign wealth fund, it is the most transparent fund in the world, consistently outranking global peers.
Transparency is paramount to the Fund, it's also part of its legislative requirement.
Unlike Canada's Maple 8 pension funds that operate at arm's length from the government, Norway's GPFG is overseen by the Ministry of Finance and the Norges Bank, the country's central bank. NBIM manages the assets but reports to Norges Bank and the Ministry of Finance.
There are also key differences in asset allocation with Canada's Maple 8 more exposed to private markets whereas Norway's GPFG is a lot more exposed to public equities and fixed income.
To be fair, they have different objectives as the sovereign wealth fund isn't looking to match liabilities and deliver risk-adjusted returns but you can argue in this environment, with stocks soaring, Norway's approach is clearly outperforming.
But if stock markets experience a long and significant bear market, you'd expect Canada's Maple 8 to outperform.
What is interesting, however, is that Norway's GPFG hardly invests anything domestically, its mostly US and global equities.
In Canada, all sorts of pressure is being placed on our domestic pensions to invest more domestically but is this the best approach?
It depends on who you ask. Leo de Bever made a persuasive case on my blog recently to invest more wisely at home, between the cracks.
But Canada's large pensions remain undeterred and given their size, they want to remain globally diversified while maintaining a healthy allocation to domestic assets.
Anyway, I can go on and on but will let you watch an interesting discussion below on the subject.
Below, Prime Minister Mark Carney has called Canada's pension funds "among the world's largest and most sophisticated investors." How large are they? By the end of 2024, they managed assets totalling nearly two and a half trillion dollars. But a lot of that money isn't being invested in Canada.
As the government tries to boost the economy through nation-building projects, should Canadian pension funds be investing more right here at home? And what could we do to make that happen?
TVO Today's The Rundown discusses with Matthew Mendelsohn, the CEO of Social Capital Partners; and Keith Ambachtsheer, the co-founder of KPA Advisory Services and director emeritus of the International Centre for Pension Management at the University of Toronto.
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