Norway's Government Pension Fund Global Gains 9.4% in First Half

Chris Tolomia of Quartz reports Norway sovereign wealth fund posts record $184B profit, discloses SpaceX stake:

Norway's Government Pension Fund Global posted a first-half profit of more than 1.75 trillion Norwegian kroner, or roughly $184.9 billion, a record for a six-month period, as equity markets — particularly in Asia — surged in the second quarter. The fund also disclosed a stake in SpaceX, according to CNBC. 

The fund returned 9.4% in the first half, outperforming its benchmark index by 0.22 percentage points. Its total value stood at 22,683 billion kroner, or around $2.34 trillion, at the end of June. Equities, which make up 72.1% of the portfolio, returned 13% over the period, with the technology sector — up 25.3% — and telecommunications sector — up 42.9% — contributing the most. Consumer discretionary was the weakest sector, falling 4%.

"The result is driven by good returns in the equity market, particularly from Asian technology stocks," Norges Bank Investment Management CEO Nicolai Tangen said in a statement on Wednesday. Asia and Oceania equity holdings returned 31.3% in the first half, the strongest of any regional grouping. At a press conference, Tangen highlighted semiconductor stocks as a key driver of returns, according to CNBC.

Norges Bank Investment Management, which manages the fund on behalf of Norway's Ministry of Finance, also revealed that it holds a 0.05% interest in SpaceX, a position worth slightly more than $1.2 billion. Among its largest individual positions, the fund holds a 1.3% interest in Nvidia, valued at $61.8 billion, and a 1.2% interest in Apple, valued at $52.7 billion as of June 30. Its portfolio spans more than 7,000 companies in over 50 countries, giving it ownership of roughly 1.5% of all publicly listed equities worldwide. 

With the SpaceX position added, the fund now has meaningful exposure to both publicly traded companies under Elon Musk's leadership. The fund's Tesla position, which amounts to a 1% ownership interest, was reported to be valued at approximately $15.7 billion by the close of June. The fund rejected Musk's pay arrangements at Tesla on two occasions — opposing his $56 billion package in 2024 and then his trillion-dollar award when it came before shareholders again at the company's late-2025 annual meeting. When reporters at Wednesday's press conference pressed Deputy CEO Trond Grande on how the fund's SpaceX exposure had changed over time, he declined to discuss specific holdings.

The fund's equity investments fell 2.6% in the first quarter as markets faced volatility, before rebounding 15.98% in the second quarter. Fixed-income investments, which make up 25.8% of the portfolio, returned 0.9% in the first half. The fund received 94 billion kroner in capital inflows during the period, though a stronger Norwegian krone reduced the fund's krone-denominated value by 427 billion kroner. 

Last week, I covered the mid-year and quarterly performance of some major Canadian pension funds:

• OTPP earned 9.5% in the first half of the year, driven by its major investment in SpaceX 
• OMERS returned 4.8% in the first half of the year 
• La Caisse gained 5.1% in the first half of the year 
• And CPP Investments delivered 7.5% in its fiscal Q1

I wanted to begin this week by covering Norway's GPFG, which is a great proxy for 70% Global Equities/ 25% Global Bonds (the Fund also has 5% in unlisted global real estate).

Not surprisingly, the Fund snapped back strongly in Q2, posting a 9.4% gain in the first half.

Tech stocks led the charge in Q2, boosting the Fund's return in the first half. 

As far as its stake in SpaceX, it's peanuts relative to the biggest investors there:

The curtain is finally lifting on who owns SpaceX (SPCX), and the stock is surging over 5% Monday.

More than 1,500 investors disclosed stakes, but only 23 account for over 80% of the reported shares.

Bloomberg, Yahoo Finance

The concentration is even more striking at the other end. Nearly 1,340 investors reported positions of fewer than 100,000 shares, yet together they own less than 1% of the shares in the filings.

Those disclosures offer the first broad look at SpaceX ownership since the company went public on June 12. Large investment managers are required to report their US stock holdings every quarter, and the latest batch includes some familiar names with enormous positions.

Alphabet (GOOGL, GOOG) leads the pack with more than 551 million shares, while Fidelity reported more than 302 million. Gigafund, Saudi Arabia's Public Investment Fund, and Nvidia (NVDA) each disclosed more than 100 million.

Holder	Shares owned (millions)	Value Friday
Alphabet	551.2	$77.2B
Fidelity	302.6	$42.4B
Gigafund	171.8	$24.1B
Saudi Public Investment Fund	154.1	$21.6B
Nvidia	122.8	$17.2B
Harvard Management Co.	12.9	$1.8B

Fidelity's number reflects stock held across its managed funds and accounts rather than one giant corporate wager. But the breadth of the list is striking anyway, spanning Big Tech, venture capital, sovereign wealth, traditional asset management, and even the Ivy League.

Harvard may be the biggest surprise. Its nearly 13 million SpaceX shares make the company the largest individual stock position in Harvard Management Co.'s publicly disclosed US equity portfolio. 

You can view the full list of institutional investors in SpaceX here.

The stock has recently popped nicely after reaching a low of $104 the day after its first earnings, but remains below the high of $225 and only $10 above its IPO price:

You have a lot of big funds in here, so expect significant volatility going forward. 

Getting back to Norway's GPFG, Nik Martin of DW reports the Fund is warning of an AI-driven stock market bubble:

As if the vast scale of artificial intelligence (AI) investments wasn't scary enough, the head of the world's largest sovereign wealth fund is also sounding the alarm.

Nicolai Tangen, CEO of Norway's Government Pension Fund Global (GPFG), warned last week that, in an extreme market collapse, a massive loss to its $2.4 trillion (€2.07 trillion) portfolio is "not completely improbable."

The fund, created to invest the Nordic country's vast oil and gas revenues, delivered a record profit of 1,753 billion Norwegian kroner ($186 billion/€161 billion) in the first six months of the year.

Yet, Tangen warned that the AI-chip trade — whose lofty valuations helped drive those gains — now poses a serious risk. A sharp correction, he warned, could potentially erase much of the massive wealth built up over the past 30 years.

During what Tangen called an "abnormal" period of low taxes, low inflation and low interest rates, the investments now finance roughly a quarter of the Norwegian government's budget.

Why fund managers remain invested despite AI concerns

While Tangen might sound overly alarmist, Bill Megginson, a leading researcher on sovereign wealth funds, believes many established fund managers share his cautious stance on stock valuations, but are "staying the course, queasily."

"Few managers are inclined to take profits when such a fundamental technology buildout, fueled by literally unprecedented levels of capital spending, shows little evidence of brittleness," Megginson, a finance professor at the University of Oklahoma, told DW.

Major technology companies are expected to invest more than $1 trillion in AI-related infrastructure like chips, data centers and power infrastructure in the race to match or beat human intelligence.

China, meanwhile, is developing capable AI models at a fraction of the cost of their rivals in the United States.

The Bank for International Settlements warned in June that AI "exuberance" risks ending in a bust if returns fall short of expectations.

Why Norway's wealth fund cannot easily hedge risk

Unlike Saudi Arabia or Singapore's sovereign wealth funds, which make large investments in private equity, infrastructure and real estate, Norway largely follows a benchmark-based investment strategy by buying index funds that track major global markets.

Technology accounts for roughly a third of the fund's stock investments.

"The oil fund follows a very passive, broadly diversified global index strategy," Karin Thorburn, research chair in finance at the Norwegian School of Economics, told DW.

Although this approach "eliminates a lot of the uncertainty of picking individual stocks," Thorburn said Norway's GPFG fund managers have "almost no room to deviate from the index or actively hedge."

A strict government mandate means the Norwegian fund cannot take significant protective positions, including holding large amounts of cash. 

Most institutional investors, on the other hand, hedge by buying options or futures, which rise in value when regular investments like stocks drop, offsetting some of the declines.

Thorburn, who served on a 2022 Norwegian government panel probing the growing geopolitical risks to the fund, said portfolio managers trust in the collective knowledge of the financial markets.

"If you were to start betting against the markets, you could be right 50% of the time, but also wrong 50% of the time," she said. "So wisely, the government has decided that we don't do that."

How vulnerable is Norway's fund to an AI-driven sell-off?

Javier Capape, a Madrid-based sovereign wealth fund specialist, thinks Norway is "unusually exposed" through its investment strategy of roughly 70% equities and 30% bonds.

"I would not describe Norway as literally 'unhedged,'" Capape said, noting that Norges Bank Investment Management, a unit at the central bank that manages the country's sovereign wealth fund, also uses currency, interest-rate and equity derivatives to protect against a crash.

Norway's strategy also contrasts sharply with that of Berkshire Hathaway, until last year run by one of the world's most successful investors, Warren Buffett.

Berkshire is currently sitting on around $365 billion in cash and short-term Treasuries.

Norway's fund does, however, benefit from continuous inflows of oil and gas revenues from its North Sea fields. In 2026, this is projected to be the equivalent of €63 billion. 

Norway's giant fund is a sovereign wealth fund, the biggest in the world, and it has a different objective function than Canada's large pension funds, which look at their liabilities first to determine the right asset mix over the long run.

Because Norway's GPFG invests heavily in global equities, and those indexes are heavily concentrated in technology stocks, its returns are far more volatile.

But over the last three years, there's no doubt Norway's giant fund has benefited from the "AI bubble" and posted some incredible returns. 

The problems will come when a bear market hits US stocks and the giant beta boost becomes a giant beta drag.

Norway's Fund is already warning that a negative scenario will hit its massive portfolio; it will hit all funds, including Canada's Maple 8 funds, but less so because their asset mix is more diversified between private and public markets.

Let me wrap it up there.

Below, NBIM CEO Nicolai Tangen discusses the company’s half-year results, its investment outlook and the impact of macroeconomic headwinds. Great insights here, take the time to listen to him.