CEO of Norway’s $1.8 trillion fund sees contrarian bet in U.S. tech

Says investors willing to go against the market should consider selling technology stocks and boost holdings in China

Author of the article:

Bloomberg News

Kari Lundgren

Published Jan 22, 2025  •  3 minute read

Nicolai Tangen, the head of Norway's sovereign wealth fund, speaks during an interview on Jan. 22 in Davos, Switzerland. Photo by Chris Ratcliffe /Bloomberg

Investors willing to go against the market in the coming months should consider selling U.S. technology stocks and private credit, while boosting holdings in China, according to the head of Norway’s US$1.8 trillion sovereign wealth fund.

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“The best thing to do is always to do the opposite of everybody else,” Nicolai Tangen said in an interview with David Rubenstein at Bloomberg House during the World Economic Forum in Davos on Wednesday. “What will that be today? Well, if you were to do the opposite of everybody else, it would be to sell the U.S. tech stocks, buy China, sell private credit, just buy stuff that is out of fashion.”

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He acknowledged that’s “very, very tough to do because if you are contrarian and you are different from your benchmarks and so on, there will be periods where you underperform and everybody is going to question your sanity,” the executive said.

The executive joined Norges Bank Investment Management (NBIM) — the official manager of the fund — in September 2020 from AKO Capital LLP, the hedge fund he founded in 2005. During his tenure, Tangen has urged his traders to think long-term and warned that inflation is likely to continue to weigh on returns in the coming years.

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While Tangen has encouraged his staff to be contrarian, he stopped short of saying whether the fund was reducing holdings in U.S. technology stocks and adding China. NBIM is due to report key financial figures for 2024 on Jan. 29.

A second administration of U.S. President Donald Trump that reduces regulation and drives growth may be “really good for our companies in America,” the executive said, while tariffs will negatively affect Europe.

“There is a big question whether the policies will be inflationary, which would be bad news in the longer term,” Tangen said, citing tighter labour markets and tariffs as factors that may drive up costs. “There could be a moment where, given the high level of government debt, investors suddenly decide, ‘We want a much higher coupon to lend to governments.’ So you could see a step up in interest rates, which could be negative for financial markets.”

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Investors should be on the lookout for rising yields on long-term debt in the United States, as the best indicator for inflationary pressure, the executive said on a panel discussing the trajectory for interest rates.

“It’s the stuff you cannot model which really derails markets,” he said, such as the financial crisis, the COVID-19 pandemic and the 2011 earthquake and tsunami in Japan. “They come about every so often and there will be another one coming up.”

The oil fund, as it is known at home, is the world’s biggest single owner of public equities, with shares in almost 9,000 companies globally. It was established in the 1990s to invest Norway’s petroleum wealth and is largely an index-tracker, working according to a strict mandate from the country’s finance ministry.

With Tangen at the helm, NBIM has taken a stronger stance on environmental, social and governance issues. Efforts have included disclosing voting intentions ahead of annual general meetings and sitting on advisory boards for international standard setting bodies. That focus isn’t going away despite a backlash in the U.S., Tangen said on Wednesday.

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Tangen, 58, was born in the southern Norwegian city of Kristiansand and began his career in the Norwegian military. He went on to study finance at Wharton School, followed by a career in London that included a stint at Egerton Capital (UK) LLP.

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During Wednesday’s interview, Tangen said he prioritizes learning over money and that stubbornness and agility are key characteristics for a good investor.

“When things change, you have to change your mind. And that’s the rarest combination in investment management,” the executive said.

—With assistance from Federica Romaniello and Stephen Treloar.

Bloomberg.com

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