February 20, 2025 • 22 mins
The CEO of Norges Bank Investment Management, the world's biggest single owner of public equities, says a fund of its size needs to be widely diversified across asset classes, because tactical asset allocation would be "very, very tough." Nicolai Tangen, who runs the $1.8 trillion sovereign wealth fund, also talks about his investment concerns and AI. Tangen speaks on "The David Rubenstein Show: Peer-to-Peer Conversations." This interview was recorded January 22 at the Bloomberg House in Davos.
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Speaker 1 (00:03):
The largest sovereign wealth fund in the world is the
Sovereign Wealth Fund of Norway. It's overseen by Nikolai Tangent,
a former Norwegian hedge fund manager who now has a
chance to oversee the largest sovereign wealth fund in the
world by far. I had a chance in Davos to
sit down with Tangent to ask him what it's like
to be responsible for a fund that large. Tell us
(00:24):
what norgous investment management really does and what your job is.
Speaker 2 (00:28):
Well, the job is to run the Norwegian someone Wealth
Fund and it has many facets. Of course, one is
to lead the investment activity. It is also to develop
the organization. There is a quite a comprehensive kind of
framework around. It's working with the board, the Ministry, the
(00:48):
supervisory board. There is a Council of Ethics which keeps
us out of ethical investments and so on. So a
lot of things involved in the world.
Speaker 1 (00:57):
So every sovereign wealth fund has somebody running it, presumably,
but virtually no other sovereign wealth on that I'm aware of,
as somebody who was a superstar private sector investor, a
member of the Giving Pledge, and somebody who's made a
lot of money in the private sector. How did you
come to do this job and leave your job running
a very successful hedge fund.
Speaker 2 (01:16):
Yeah, that's interesting. So I had been running this company
called Ako Capital for fifteen years and I thought, you know,
what kind of the learning is plateauing, and I need
to move on in life and do some other things.
So I actually was starting to apply to go back
to university and then this job came up, and I thought, wow,
it combines as management, it combines you know, developing an organization,
(01:41):
and also to do something good for the country. So
he was just perfect.
Speaker 1 (01:44):
So where did Norway get all of this money? I
mean one point seven trillion dollars is a lot of money.
Where did you get all this money?
Speaker 2 (01:52):
Well, you know, we'd been drilling on the Norwegian shelf
for a long time and and actually this was in
sixty nine in the in the autumn, like a cold
day like today, and they were they were on the
last well. And this was Phillips operating a platform called
Ocean Viking. And then two o'clock in the morning, this
(02:13):
platform chief was told to wake up, you know, the
guy in charge, and he's just like, hey, why do
you wake me up? At two in the morning. It
was just like you know what, we found some white
and it was the biggest fine the world had ever
seen off shore. And then this was announced in the
Norwegian population on the day before Christmas Eve sixty nine,
(02:34):
and so that's that's where it started.
Speaker 1 (02:35):
So if Leif Erickson had not gone to North America
and just stayed in Norway, it would have been better
for Norway, right, because he could have discovered the oil
there and not have gone to look for riches in
North America.
Speaker 2 (02:46):
Could be KULDB.
Speaker 1 (02:47):
So let's talk about the current investment environment. As we
talked today, President Trump has been inaugurated in the United States.
Are you worried about some of the America first policies
that he has said he's going to pursue, or as
in a global investment manager, doesn't really make a.
Speaker 2 (03:04):
Difference to you, Well, it's a complex question because we
are a global investor, right. So if we then first
disregard all types of policies which can impact society and
just look at it from a pure financial point of view,
I think in the short term it'd be really good
for our companies in America. There'd be less regulation, there'll
(03:26):
be more more growth, so that's positive. Now, of course,
if there are a lots of tariffs or European companies
will be hit by it, so that'd be negative. And
then of course also there is a big question whether
the policies will be information area, which would be bad
news in the longer term.
Speaker 1 (03:42):
So let's talk for a moment about enorgious investment management.
When was it actually set up? That oil was discovered
in what nineteen sixty nine? All right, so when was
this organization set up?
Speaker 2 (03:55):
It was set up in ninety six and the first
deposit there was like two billion in Norwegian growner. It's
grown to twenty thousand billion, so good growth.
Speaker 1 (04:05):
So now the money that comes in from the oil
and you invested, does that money go to every citizen
in Norway every year or does it just stay in
the central reserve for the use of the government.
Speaker 2 (04:17):
Well, I would say that a couple of clever things
that the politicians did at the time. They also established
what is called the spending rule, so you can only
spend three percent of the fund every year, and three
percent of the fund goes into the budget. Now the
fund is now so large that it accounts for twenty
five percent or between twenty and twenty five percent of
the state budget. But I think it's very good to
(04:38):
have that rule in.
Speaker 1 (04:39):
Place, right, So twenty five percent of a government's budget
comes from what you do every year.
Speaker 2 (04:43):
Yeah, and my seven hundred colleagues.
Speaker 1 (04:45):
How many people actually work for you? Yeah?
Speaker 2 (04:48):
Well, so we got roughly seven hundred we have. We
got one hundred in New York and fourteen London, we
got fourteen Singapore and the rest would be in Oslo.
Speaker 1 (04:57):
So the people pay an enormous amount of attention to
your investment success. Does everybody in Norway look every day
in the newspapers and see how you're doing, because that
will affect Norway's government.
Speaker 2 (05:07):
Well, not only every day, we have it on a website.
We have a ticker which shows the real value of
the fund at all times, and it's updated thirteen times
every second.
Speaker 1 (05:17):
So that's a lot of pressure every hour on people
attention to what you're doing.
Speaker 2 (05:23):
Absolutely.
Speaker 1 (05:24):
So your job, though, is to oversee several hundred people
making investment decisions. Do they come to you if it's
a really big investment decision and say we're going to
put one hundred million dollars in something, or is it
you're just doing strategic things and you're not making individual
investment decisions.
Speaker 2 (05:38):
Well, it's since it's such a large funt, you need
to be pretty index there in what you're doing. And
we have a very good investment mandate which we get
from the Ministry of Finance, and then we follow that
and then we have decentralized the various investment mandates within
the firm.
Speaker 1 (05:54):
So do people in Norway or the government criticize you
saying you bought too much apple stock, or you didn't
buy enough apple stock, or you don't get those kind
of criticisms.
Speaker 2 (06:02):
That's exactly right. So we always make mistakes, and that's
always in the papers because either either you have too
much or you have too little, or you know, when
you own a bit of nine thousand companies across the world,
there is always something going wrong somewhere and we always
own it, and so we are always criticizing.
Speaker 1 (06:20):
So today, if I was looking for some good investment ideas,
Let's suppose somebody's watching and say, what is the largest
sovereign wealth fund in the world, thinking is a good idea?
What would you say A couple of good ideas?
Speaker 2 (06:31):
No, I think if you're a long term investlerg we
are you want to be widely diversified across as a classes,
across geographies. It's very very tough to do this tactical
asset education. I think that's nearly impossible. The best thing
to do is always to do the opposite of everybody else.
And what would that be today? Well, if you were
to do the opposite of everybody else, you'd be to
(06:51):
sell the US tech stocks, you know, buy China, sell
private credit, you know, just buy stuff which is out
of fashion. But it's very, very tough to do because
if you are contrariant and you are different from your
benchmarks and so on, there will be periods where you
end up performing and everybody is going to question your sanity.
Speaker 1 (07:09):
What about artificial intelligence? Is that a good area and invest
in that? Oh?
Speaker 2 (07:13):
It has been fantastic and we have made a lot
of money for the fund.
Speaker 1 (07:16):
You know.
Speaker 2 (07:17):
The biggest contributors so the last few years have of
course been the big American AI companies. And I pulled
people in ORGUS just before Christmas when I ask them
how much more efficient are you now because of the
new tools, and on average people thought they were fifteen
percent more efficient really good.
Speaker 1 (07:34):
So in Vidio is still a good stock to buy.
Speaker 2 (07:36):
Well that I don't know, but.
Speaker 1 (07:39):
For sure they make good products. When you look at
your investment team, did they come in every week and
say here's some ideas we have and do you tell
them yes, no, yes, no? Or you just listen to
what they recommend?
Speaker 2 (07:51):
Well, they would decide, I think, you know, in order
to really judge how they're doing, they need to be
toky accountable and you can't interfere in the investment process.
So I don't interfere in the investment process.
Speaker 1 (08:00):
Well, as we talk today in the United States, at
least ESG and DEI seem to be in less favor
than they were maybe two or three years ago. Is
that the case in Norway? No, So you don't really
care what the US is doing in this regard.
Speaker 2 (08:15):
Well, there is clearly a backlash against ESG right, but
the policies we have they are anchored in the Parliament
and so we have not changing. In one mind, we
think it's important with client reporting, We think diversity is
good and so on.
Speaker 1 (08:28):
In most Scandinavian countries, and I think certainly in Norway
there's concerned about climate change and there's a lot of
interest in renewable energy, but you make your money from
non renewable energy. So is there an incongruity when you're
making all this money from carbon carbonized kind of chemicals
and fuels, but you really don't believe in that to
(08:48):
some extent, How do you square that?
Speaker 2 (08:50):
Well, we believe in it, and we do think that
in particular, the gas that Norway produces, which is very
high proportional of the gas supply in Europe, is very
important and it continues to be a big part of
the energy supply and and important for security for many
many years to come.
Speaker 1 (09:08):
Let's talk about your own background. You weren't just working
your way up in the government of nord just investment management.
You were very successful, as I said earlier, in the
private sector. Where were you born.
Speaker 2 (09:20):
I was born in a small town in southern Norway,
Christiansand which not many people have heard about.
Speaker 1 (09:26):
And were your parents' investment managers?
Speaker 2 (09:30):
No, my mother worked in the public sector with museums
and art and my father was an entrepreneur.
Speaker 1 (09:36):
Where did you go to school?
Speaker 2 (09:38):
I started off in Norway. I studied Russian in the
Intelligence service. I went to Wharton, did business undergrad and
then I have done some degrees afterwards. I've done one
in art history and one in social psychology.
Speaker 1 (09:51):
Is it unusual for somebody in Norway to go to
college at Wharton School in Philadelphia?
Speaker 2 (09:55):
It's great school, but it's pretty pretty It's not so common.
Speaker 1 (09:58):
So when you went to Wharton and you said you're
from Norway, to people in Wharton say where is that?
Speaker 2 (10:02):
Or yeah, of course?
Speaker 1 (10:05):
And did they make fun of Norway? Did they say
you were a Viking or something like that? Yeah, okay,
well I was okay, okay. So you graduate from Wharton
and you get other degrees, you set up your own head.
Speaker 2 (10:18):
I mean, the cool thing is, you know, you come
from Norway, which is like a very agilitarian society and
it's all about being very humble and so on, and
then you come to Wharton, which is just like the opposite.
It's like I remember, you know, I went to clubs
one day and it's just like, hey, what do you
guys want to do? I just want to conquer the world,
and everybody approad. I didn't say that, but somebody else said,
and you know, people applauded, and it was just like
(10:38):
your mindset totally different.
Speaker 1 (10:40):
So you didn't find a lot of humility at Wharton,
not so much. So okay, so you graduated, didn't Did
you go into the private sector right away?
Speaker 2 (10:48):
Yeah? I went then became an analyst with a stolkworking firm.
I went there, worked there for five years. Then I
joined my largest client, which was a hedge fund and
one of the earliest hedge funds in Europe.
Speaker 1 (10:59):
Where was it, London? When did you say I'm going
to set up my own hedge fund?
Speaker 2 (11:03):
Well, so that was a bit afterwards because I had
worked for these hedge fund for five years and made
some money, and I took a break. So I did
it a master's in art history, but realized that wasn't
very good at it.
Speaker 1 (11:14):
So how do you know you're not good at art history?
I mean, you don't measure it the way you do investments.
Speaker 2 (11:18):
Wow, you get feedback from the professor that you're not
the brightest thing. Okay, So I thought, Hey, I'm better
at looking at stokes and paintings and so let's set
up these erm instead.
Speaker 1 (11:27):
But you built a art collection, so you must know
something about art.
Speaker 2 (11:31):
Yeah, but it's easier to buy art than write about art.
Speaker 1 (11:34):
Okay. So you set up your own hedge fund eventually. Yeah,
and how big was it before you stopped it?
Speaker 2 (11:42):
Just under twenty billion dollars, So it was one of
the largest funds in Europe. No, I'm really proud of
what we did there. We had many of the largest
endowments and universities in the world investing with us, so
it was a fantastic thing.
Speaker 1 (11:51):
So you have twenty billion dollar hedge fund and your
averaging rates of return I assume that are in double
digit kinds of areas, right, And so when you up
this opportunity to run norgeous investment management to do, say
to your family, guess what, I'm not going to be
making that much money anymore and we have to live
work conservatively. Yeah, and what did they say? They were
(12:12):
happy with that?
Speaker 2 (12:13):
Yeah, Wow, I've good enough money to buy food and shoes.
Speaker 1 (12:19):
But usually hedge fund managers don't say they need to
have enough money to buy the food. They want to
buy airplanes and art and and other things.
Speaker 2 (12:26):
Yeah, And I think that's a misconstrued perception of what
happens is you know, in my mind, happiness is about learning.
That's how you measure happiness is how much you have learned.
You know, some people say, you know, you measure success
by how many who has got the most money when
they die? And I just think that's totally failure. I mean,
the person's got the most money when he when he
or she dies, that they have they have lost. They haven't,
(12:47):
they haven't got it.
Speaker 1 (12:48):
Oh, I didn't realize that. So well you were?
Speaker 2 (12:52):
You done this?
Speaker 1 (12:53):
All right? So I lot something I gotta learn. But okay,
so all right, so you set up your hedge fund.
But when you left your hedge fund, did you have
other people running? Is it still around?
Speaker 2 (13:01):
Absolutely? So it was a fantastic thing. It's been a
great transition to the next generation. Really readied. They are
doing better than ever and it's just a total win win.
So but when I when I left for the for
the position in Norway, I had to to give away
my ownership stake, so I gave it to a charitable foundation.
And so the stake in the hedge fund is funding
(13:23):
that charitable fundation.
Speaker 1 (13:25):
So you did so well that you actually joined the
giving pledge right, which means you've got a net worth
of at least a billion dollars or so are you
the only person in Dorway that signed the giving pledge.
It is one more, one more. Okay, So when you
go to the giving pledge meetings, do you say, guess what,
I'm giving away money now? But I'm I'm really ranting
(13:46):
running the Norway Sovereign Wealth Fund? Or you don't. People
don't talk to you about what you do now?
Speaker 2 (13:50):
No, No, they talk about that too.
Speaker 1 (13:52):
So you ever go to reunions at Wharton and say,
I wasn't that.
Speaker 2 (13:57):
I was on the board. I was on the board.
Speaker 1 (13:58):
You working for some time now, and but they I
guess they asked for contributions from time to time.
Speaker 2 (14:03):
Yeah, and okay, but all that I did, I did
give them a building.
Speaker 1 (14:08):
But all the people in your class who are bragging
about how great they were and they were to conquer
the world, did you ever show up and say, look,
you're the guy who actually did it, and you didn't
brag about during that.
Speaker 2 (14:16):
You didn't say that I never felt that I conquered
the world.
Speaker 1 (14:20):
For five years, you've been running this fund and done
pretty well. Obviously, now your term is up. You have
another five year term you could get, and you're apply.
Speaker 2 (14:30):
I applied last week.
Speaker 1 (14:31):
You applied. Okay, you have to apply or you already
have the job.
Speaker 2 (14:34):
No, it's it has to be you have to apply again.
So I updated my CV and applied.
Speaker 1 (14:40):
Wow, okay, did anybody else apply or yeah?
Speaker 2 (14:42):
I think so. I mean, I don't know, it's I
don't know. I mean, I'm when it comes to this,
I'm very very humble. I if they find anybody else
who's better at doing that job, he or she should
get that job. Right, it's a very important position in
the country. And so I have applied. I hope I
will get an extension. So if not, I to do
something else.
Speaker 1 (15:01):
So you're willing to do another five years, and your
compensation as the person running it is modest, I assume
compared to what you used to make.
Speaker 2 (15:09):
Yeah, it's a well paid job, but it's, of course
it's a public sexual job.
Speaker 1 (15:15):
Any thought about going into politics and running for government positions,
prime minister or something like that. No, you don't want
to go into that. No interest in that. And what
about any thing after you're finished. That's suppose you do
another five years and for ten years of this you
probably would say that's enough.
Speaker 2 (15:33):
Well, I'm going to spend the rest of my life,
hopefully doing good things. You know, I'd love to go
back to university at some stage you do no degree,
learn some more things.
Speaker 1 (15:44):
Art history, but you're not that good at that, so
you would do something else. You think, okay, but you
have a big art collection. Still in what area do
you collect art?
Speaker 2 (15:51):
We have the biggest collection of Nordic Modernist art and
we've given that to a museum which opened last year.
New York Times recently said he was one of the
fifty most important places to go in twenty twenty five.
So you will have to go, of course.
Speaker 1 (16:06):
So if somebody is watching this and they've never been
to Norway, what would you say about what is great
about Norway that would deserve their visiting? What is Washington?
Can you see in Norway? Well?
Speaker 2 (16:17):
The nature, the nature is unrivaled. I mean, it's just
like Switzerland with a little of c around it, right,
and it's absolutely beautiful. You really close to the fjord,
you close the mountains. He's good for skiing, he's good
for hiking. It's perfect and not too many people, so
it's not so crowded.
Speaker 1 (16:34):
How many total people are there in five million? Five million?
So when Alfred Nobel was awarding his developing his Nobel prizes.
He had the prizes being given by people in Sweden,
the Swedish academies, but he didn't think the Swedes were peaceful,
loving people, so he said, the Peace Prize is given
by people in Norway, So the Norway is very peaceful. Yes,
(16:57):
And you have no interest in getting into international diplomatic
things or like something like that. No, okay, And your
children are they interested in investing? No?
Speaker 2 (17:07):
Thankfully, I mean thank God for that, because I think
in my mind, you just don't want to follow your parents.
You want to create your own destiny. You wanna you
don't want to be measured against the success of your parents.
Speaker 1 (17:21):
You know.
Speaker 2 (17:22):
I don't really believe in the inheritance. I think to
inherent a little money, it's not a good thing. If
you are successful, it's just because you inherited a little money,
and if you fail, you are a total failure because
you started with a lot of money and you didn't
manage to do it. So I just think it's so,
you know, let them do what they want.
Speaker 1 (17:37):
So today, are you worried about your borders because of
what's going on in Russia and Ukraine? Is that something
you worry about in terms of the impact of Russia
Ukraine on your investment appetite for things like that.
Speaker 2 (17:50):
I'm not worried about Russia invading Norway anytime soon. We
are a member of it of NATO, we do border
to Russia. But now since Finland and Sweat join NATO,
we feel stronger than before.
Speaker 1 (18:02):
So today, what would you say your biggest investment concerns are?
You're running one point seven trillion dollar fun for the
average person to not manage that much money, what should
they be worrying about? And what are you worrying about now?
Speaker 2 (18:13):
I think you know, I think you've got two things.
One you have the known and knowns right so and
there at the top of my list would be two things.
One is inflation, because I think there is an argument
in a tate tight labor market when you potentially decline
the supply or to reduce the supply of labor in
the US you put on tariffs. These things can be
(18:34):
inflation area. And there could be a moment where, given
the high level of government debt, that the investors certainly decide,
you know what, we want a much higher coupon to
lend to, you know, to governments. And so you could
see a step up in interest rates, which could be
negative financial markets. Then of course all the AI related stocks.
The epicenter here is is Taiwan, so you need to
(18:55):
watch that. The thing that really scarce us when it
happens is the expected, you know, whether it be a
meltdown of nuclear reactors in Japan or COVID or financial crisis.
Is the stuff you cannot model, which really de raise markets.
And they come about every so often, and there will
be another one coming up.
Speaker 1 (19:14):
So I suppose I'm one of the people interviewing you
for your real application to at this job for the
next five years. What would you say is the reason
that you deserve the job. You've done pretty well, or
you like the job, or people are happy, or your
rate of return has been very good. What would you
say is the reason you should get this job?
Speaker 2 (19:31):
The organization has done well, is a real teamwork. We
built a really great team. You know, we have done
a lot of great things. Were now the most transparent
fund in the world. We've done a lot of things
like that, right, And there's always lower risk to take
the incumbent than changing. But as I said, you know,
these are just pros and cons, and well other people
(19:52):
out there who are really really excellent.
Speaker 1 (19:54):
Right, So what do you do for outside activities? Are
you a skier or you're some other kind of out well.
Speaker 2 (20:00):
I spend a lot of time in nature. I walk
in the forest, I do cross country skiing. I pick
mushrooms in the autumn. Do what mushrooms? Not the magic run?
Speaker 1 (20:14):
What do you pick them? Or you grow them or what? Oh?
Speaker 2 (20:16):
You walk around in the forest and you pick wild
mushrooms and you go home and you cook them and
you make you know, like chanto el spaghetti.
Speaker 1 (20:24):
Wow, that's an unusual I have. Wow. Okay, So generally
you just like me as a very happy person, and
I generally don't find that many happy people in the
investment world are always worried about something else. But you're
pretty happy. So how did you get to be so happy?
Speaker 2 (20:40):
Well, first of all, you have to figure out what
is it that makes you happy? And I do think
people mistake that quite often. You know, they just tried
to make more money to buy more things. That's not
where true happiness comes from. It comes from spending time
with friends and family and learning and in ternsally and
you know, as you know, I also do a podcast,
(21:02):
and I learned a lot through that podcast.
Speaker 1 (21:03):
If you're giving advice to somebody that's watching this about
how to be a good investment manager, what is the
single most important piece of investment advice you could give somebody? Learn?
Speaker 2 (21:14):
Learn, Learn, And the combination of being stubborn and agile.
You know, you have to stick with your guns, you
have to believe in what you do. You have to
be able to contrariant. But when things change, you have
to change your mind. And that's the variest combination in
investment management.
Speaker 1 (21:29):
So you think humility is better than arrogance and a
good investor, well.
Speaker 2 (21:33):
You need to be confidently confident. Humility is the magic.
Speaker 1 (21:37):
Have you ever met Warren Buffett? No? Really, and no
interest in meeting if he's called advice, But he hasn't
called you for ideas or anything like that.
Speaker 2 (21:46):
No, no, but he I haven't met him. Well I briefly.
I met him briefly.
Speaker 1 (21:51):
Okay, So is there one person that is a role
model for you? If it's not Warren Buffett, maybe it
is even though you haven't met him. Is there anybody
you would say is somebody you have as a role
model in the investment area?
Speaker 2 (22:02):
Well, I think it's difficult to not mention Bill Gates
as a role model if you are a philanthropist, because
you make a lot of money and then you are
very organized and structured in the way you give it away.
I think that's really impressive.
Speaker 1 (22:17):
Thanks for listening to hear more of my interviews. You
can subscribe and download my podcast on Spotify, Apple, or
wherever you listen.
The largest sovereign wealth fund in the world is the
Sovereign Wealth Fund of Norway. It's overseen by Nikolai Tangent,
a former Norwegian hedge fund manager who now has a
chance to oversee the largest sovereign wealth fund in the
world by far. I had a chance in Davos to
sit down with Tangent to ask him what it's like
to be responsible for a fund that large. Tell us
(00:24):
what norgous investment management really does and what your job is.
Speaker 2 (00:28):
Well, the job is to run the Norwegian someone Wealth
Fund and it has many facets. Of course, one is
to lead the investment activity. It is also to develop
the organization. There is a quite a comprehensive kind of
framework around. It's working with the board, the Ministry, the
(00:48):
supervisory board. There is a Council of Ethics which keeps
us out of ethical investments and so on. So a
lot of things involved in the world.
Speaker 1 (00:57):
So every sovereign wealth fund has somebody running it, presumably,
but virtually no other sovereign wealth on that I'm aware of,
as somebody who was a superstar private sector investor, a
member of the Giving Pledge, and somebody who's made a
lot of money in the private sector. How did you
come to do this job and leave your job running
a very successful hedge fund.
Speaker 2 (01:16):
Yeah, that's interesting. So I had been running this company
called Ako Capital for fifteen years and I thought, you know,
what kind of the learning is plateauing, and I need
to move on in life and do some other things.
So I actually was starting to apply to go back
to university and then this job came up, and I thought, wow,
it combines as management, it combines you know, developing an organization,
(01:41):
and also to do something good for the country. So
he was just perfect.
Speaker 1 (01:44):
So where did Norway get all of this money? I
mean one point seven trillion dollars is a lot of money.
Where did you get all this money?
Speaker 2 (01:52):
Well, you know, we'd been drilling on the Norwegian shelf
for a long time and and actually this was in
sixty nine in the in the autumn, like a cold
day like today, and they were they were on the
last well. And this was Phillips operating a platform called
Ocean Viking. And then two o'clock in the morning, this
(02:13):
platform chief was told to wake up, you know, the
guy in charge, and he's just like, hey, why do
you wake me up? At two in the morning. It
was just like you know what, we found some white
and it was the biggest fine the world had ever
seen off shore. And then this was announced in the
Norwegian population on the day before Christmas Eve sixty nine,
(02:34):
and so that's that's where it started.
Speaker 1 (02:35):
So if Leif Erickson had not gone to North America
and just stayed in Norway, it would have been better
for Norway, right, because he could have discovered the oil
there and not have gone to look for riches in
North America.
Speaker 2 (02:46):
Could be KULDB.
Speaker 1 (02:47):
So let's talk about the current investment environment. As we
talked today, President Trump has been inaugurated in the United States.
Are you worried about some of the America first policies
that he has said he's going to pursue, or as
in a global investment manager, doesn't really make a.
Speaker 2 (03:04):
Difference to you, Well, it's a complex question because we
are a global investor, right. So if we then first
disregard all types of policies which can impact society and
just look at it from a pure financial point of view,
I think in the short term it'd be really good
for our companies in America. There'd be less regulation, there'll
(03:26):
be more more growth, so that's positive. Now, of course,
if there are a lots of tariffs or European companies
will be hit by it, so that'd be negative. And
then of course also there is a big question whether
the policies will be information area, which would be bad
news in the longer term.
Speaker 1 (03:42):
So let's talk for a moment about enorgious investment management.
When was it actually set up? That oil was discovered
in what nineteen sixty nine? All right, so when was
this organization set up?
Speaker 2 (03:55):
It was set up in ninety six and the first
deposit there was like two billion in Norwegian growner. It's
grown to twenty thousand billion, so good growth.
Speaker 1 (04:05):
So now the money that comes in from the oil
and you invested, does that money go to every citizen
in Norway every year or does it just stay in
the central reserve for the use of the government.
Speaker 2 (04:17):
Well, I would say that a couple of clever things
that the politicians did at the time. They also established
what is called the spending rule, so you can only
spend three percent of the fund every year, and three
percent of the fund goes into the budget. Now the
fund is now so large that it accounts for twenty
five percent or between twenty and twenty five percent of
the state budget. But I think it's very good to
(04:38):
have that rule in.
Speaker 1 (04:39):
Place, right, So twenty five percent of a government's budget
comes from what you do every year.
Speaker 2 (04:43):
Yeah, and my seven hundred colleagues.
Speaker 1 (04:45):
How many people actually work for you? Yeah?
Speaker 2 (04:48):
Well, so we got roughly seven hundred we have. We
got one hundred in New York and fourteen London, we
got fourteen Singapore and the rest would be in Oslo.
Speaker 1 (04:57):
So the people pay an enormous amount of attention to
your investment success. Does everybody in Norway look every day
in the newspapers and see how you're doing, because that
will affect Norway's government.
Speaker 2 (05:07):
Well, not only every day, we have it on a website.
We have a ticker which shows the real value of
the fund at all times, and it's updated thirteen times
every second.
Speaker 1 (05:17):
So that's a lot of pressure every hour on people
attention to what you're doing.
Speaker 2 (05:23):
Absolutely.
Speaker 1 (05:24):
So your job, though, is to oversee several hundred people
making investment decisions. Do they come to you if it's
a really big investment decision and say we're going to
put one hundred million dollars in something, or is it
you're just doing strategic things and you're not making individual
investment decisions.
Speaker 2 (05:38):
Well, it's since it's such a large funt, you need
to be pretty index there in what you're doing. And
we have a very good investment mandate which we get
from the Ministry of Finance, and then we follow that
and then we have decentralized the various investment mandates within
the firm.
Speaker 1 (05:54):
So do people in Norway or the government criticize you
saying you bought too much apple stock, or you didn't
buy enough apple stock, or you don't get those kind
of criticisms.
Speaker 2 (06:02):
That's exactly right. So we always make mistakes, and that's
always in the papers because either either you have too
much or you have too little, or you know, when
you own a bit of nine thousand companies across the world,
there is always something going wrong somewhere and we always
own it, and so we are always criticizing.
Speaker 1 (06:20):
So today, if I was looking for some good investment ideas,
Let's suppose somebody's watching and say, what is the largest
sovereign wealth fund in the world, thinking is a good idea?
What would you say A couple of good ideas?
Speaker 2 (06:31):
No, I think if you're a long term investlerg we
are you want to be widely diversified across as a classes,
across geographies. It's very very tough to do this tactical
asset education. I think that's nearly impossible. The best thing
to do is always to do the opposite of everybody else.
And what would that be today? Well, if you were
to do the opposite of everybody else, you'd be to
(06:51):
sell the US tech stocks, you know, buy China, sell
private credit, you know, just buy stuff which is out
of fashion. But it's very, very tough to do because
if you are contrariant and you are different from your
benchmarks and so on, there will be periods where you
end up performing and everybody is going to question your sanity.
Speaker 1 (07:09):
What about artificial intelligence? Is that a good area and invest
in that? Oh?
Speaker 2 (07:13):
It has been fantastic and we have made a lot
of money for the fund.
Speaker 1 (07:16):
You know.
Speaker 2 (07:17):
The biggest contributors so the last few years have of
course been the big American AI companies. And I pulled
people in ORGUS just before Christmas when I ask them
how much more efficient are you now because of the
new tools, and on average people thought they were fifteen
percent more efficient really good.
Speaker 1 (07:34):
So in Vidio is still a good stock to buy.
Speaker 2 (07:36):
Well that I don't know, but.
Speaker 1 (07:39):
For sure they make good products. When you look at
your investment team, did they come in every week and
say here's some ideas we have and do you tell
them yes, no, yes, no? Or you just listen to
what they recommend?
Speaker 2 (07:51):
Well, they would decide, I think, you know, in order
to really judge how they're doing, they need to be
toky accountable and you can't interfere in the investment process.
So I don't interfere in the investment process.
Speaker 1 (08:00):
Well, as we talk today in the United States, at
least ESG and DEI seem to be in less favor
than they were maybe two or three years ago. Is
that the case in Norway? No, So you don't really
care what the US is doing in this regard.
Speaker 2 (08:15):
Well, there is clearly a backlash against ESG right, but
the policies we have they are anchored in the Parliament
and so we have not changing. In one mind, we
think it's important with client reporting, We think diversity is
good and so on.
Speaker 1 (08:28):
In most Scandinavian countries, and I think certainly in Norway
there's concerned about climate change and there's a lot of
interest in renewable energy, but you make your money from
non renewable energy. So is there an incongruity when you're
making all this money from carbon carbonized kind of chemicals
and fuels, but you really don't believe in that to
(08:48):
some extent, How do you square that?
Speaker 2 (08:50):
Well, we believe in it, and we do think that
in particular, the gas that Norway produces, which is very
high proportional of the gas supply in Europe, is very
important and it continues to be a big part of
the energy supply and and important for security for many
many years to come.
Speaker 1 (09:08):
Let's talk about your own background. You weren't just working
your way up in the government of nord just investment management.
You were very successful, as I said earlier, in the
private sector. Where were you born.
Speaker 2 (09:20):
I was born in a small town in southern Norway,
Christiansand which not many people have heard about.
Speaker 1 (09:26):
And were your parents' investment managers?
Speaker 2 (09:30):
No, my mother worked in the public sector with museums
and art and my father was an entrepreneur.
Speaker 1 (09:36):
Where did you go to school?
Speaker 2 (09:38):
I started off in Norway. I studied Russian in the
Intelligence service. I went to Wharton, did business undergrad and
then I have done some degrees afterwards. I've done one
in art history and one in social psychology.
Speaker 1 (09:51):
Is it unusual for somebody in Norway to go to
college at Wharton School in Philadelphia?
Speaker 2 (09:55):
It's great school, but it's pretty pretty It's not so common.
Speaker 1 (09:58):
So when you went to Wharton and you said you're
from Norway, to people in Wharton say where is that?
Speaker 2 (10:02):
Or yeah, of course?
Speaker 1 (10:05):
And did they make fun of Norway? Did they say
you were a Viking or something like that? Yeah, okay,
well I was okay, okay. So you graduate from Wharton
and you get other degrees, you set up your own head.
Speaker 2 (10:18):
I mean, the cool thing is, you know, you come
from Norway, which is like a very agilitarian society and
it's all about being very humble and so on, and
then you come to Wharton, which is just like the opposite.
It's like I remember, you know, I went to clubs
one day and it's just like, hey, what do you
guys want to do? I just want to conquer the world,
and everybody approad. I didn't say that, but somebody else said,
and you know, people applauded, and it was just like
(10:38):
your mindset totally different.
Speaker 1 (10:40):
So you didn't find a lot of humility at Wharton,
not so much. So okay, so you graduated, didn't Did
you go into the private sector right away?
Speaker 2 (10:48):
Yeah? I went then became an analyst with a stolkworking firm.
I went there, worked there for five years. Then I
joined my largest client, which was a hedge fund and
one of the earliest hedge funds in Europe.
Speaker 1 (10:59):
Where was it, London? When did you say I'm going
to set up my own hedge fund?
Speaker 2 (11:03):
Well, so that was a bit afterwards because I had
worked for these hedge fund for five years and made
some money, and I took a break. So I did
it a master's in art history, but realized that wasn't
very good at it.
Speaker 1 (11:14):
So how do you know you're not good at art history?
I mean, you don't measure it the way you do investments.
Speaker 2 (11:18):
Wow, you get feedback from the professor that you're not
the brightest thing. Okay, So I thought, Hey, I'm better
at looking at stokes and paintings and so let's set
up these erm instead.
Speaker 1 (11:27):
But you built a art collection, so you must know
something about art.
Speaker 2 (11:31):
Yeah, but it's easier to buy art than write about art.
Speaker 1 (11:34):
Okay. So you set up your own hedge fund eventually. Yeah,
and how big was it before you stopped it?
Speaker 2 (11:42):
Just under twenty billion dollars, So it was one of
the largest funds in Europe. No, I'm really proud of
what we did there. We had many of the largest
endowments and universities in the world investing with us, so
it was a fantastic thing.
Speaker 1 (11:51):
So you have twenty billion dollar hedge fund and your
averaging rates of return I assume that are in double
digit kinds of areas, right, And so when you up
this opportunity to run norgeous investment management to do, say
to your family, guess what, I'm not going to be
making that much money anymore and we have to live
work conservatively. Yeah, and what did they say? They were
(12:12):
happy with that?
Speaker 2 (12:13):
Yeah, Wow, I've good enough money to buy food and shoes.
Speaker 1 (12:19):
But usually hedge fund managers don't say they need to
have enough money to buy the food. They want to
buy airplanes and art and and other things.
Speaker 2 (12:26):
Yeah, And I think that's a misconstrued perception of what
happens is you know, in my mind, happiness is about learning.
That's how you measure happiness is how much you have learned.
You know, some people say, you know, you measure success
by how many who has got the most money when
they die? And I just think that's totally failure. I mean,
the person's got the most money when he when he
or she dies, that they have they have lost. They haven't,
(12:47):
they haven't got it.
Speaker 1 (12:48):
Oh, I didn't realize that. So well you were?
Speaker 2 (12:52):
You done this?
Speaker 1 (12:53):
All right? So I lot something I gotta learn. But okay,
so all right, so you set up your hedge fund.
But when you left your hedge fund, did you have
other people running? Is it still around?
Speaker 2 (13:01):
Absolutely? So it was a fantastic thing. It's been a
great transition to the next generation. Really readied. They are
doing better than ever and it's just a total win win.
So but when I when I left for the for
the position in Norway, I had to to give away
my ownership stake, so I gave it to a charitable foundation.
And so the stake in the hedge fund is funding
(13:23):
that charitable fundation.
Speaker 1 (13:25):
So you did so well that you actually joined the
giving pledge right, which means you've got a net worth
of at least a billion dollars or so are you
the only person in Dorway that signed the giving pledge.
It is one more, one more. Okay, So when you
go to the giving pledge meetings, do you say, guess what,
I'm giving away money now? But I'm I'm really ranting
(13:46):
running the Norway Sovereign Wealth Fund? Or you don't. People
don't talk to you about what you do now?
Speaker 2 (13:50):
No, No, they talk about that too.
Speaker 1 (13:52):
So you ever go to reunions at Wharton and say,
I wasn't that.
Speaker 2 (13:57):
I was on the board. I was on the board.
Speaker 1 (13:58):
You working for some time now, and but they I
guess they asked for contributions from time to time.
Speaker 2 (14:03):
Yeah, and okay, but all that I did, I did
give them a building.
Speaker 1 (14:08):
But all the people in your class who are bragging
about how great they were and they were to conquer
the world, did you ever show up and say, look,
you're the guy who actually did it, and you didn't
brag about during that.
Speaker 2 (14:16):
You didn't say that I never felt that I conquered
the world.
Speaker 1 (14:20):
For five years, you've been running this fund and done
pretty well. Obviously, now your term is up. You have
another five year term you could get, and you're apply.
Speaker 2 (14:30):
I applied last week.
Speaker 1 (14:31):
You applied. Okay, you have to apply or you already
have the job.
Speaker 2 (14:34):
No, it's it has to be you have to apply again.
So I updated my CV and applied.
Speaker 1 (14:40):
Wow, okay, did anybody else apply or yeah?
Speaker 2 (14:42):
I think so. I mean, I don't know, it's I
don't know. I mean, I'm when it comes to this,
I'm very very humble. I if they find anybody else
who's better at doing that job, he or she should
get that job. Right, it's a very important position in
the country. And so I have applied. I hope I
will get an extension. So if not, I to do
something else.
Speaker 1 (15:01):
So you're willing to do another five years, and your
compensation as the person running it is modest, I assume
compared to what you used to make.
Speaker 2 (15:09):
Yeah, it's a well paid job, but it's, of course
it's a public sexual job.
Speaker 1 (15:15):
Any thought about going into politics and running for government positions,
prime minister or something like that. No, you don't want
to go into that. No interest in that. And what
about any thing after you're finished. That's suppose you do
another five years and for ten years of this you
probably would say that's enough.
Speaker 2 (15:33):
Well, I'm going to spend the rest of my life,
hopefully doing good things. You know, I'd love to go
back to university at some stage you do no degree,
learn some more things.
Speaker 1 (15:44):
Art history, but you're not that good at that, so
you would do something else. You think, okay, but you
have a big art collection. Still in what area do
you collect art?
Speaker 2 (15:51):
We have the biggest collection of Nordic Modernist art and
we've given that to a museum which opened last year.
New York Times recently said he was one of the
fifty most important places to go in twenty twenty five.
So you will have to go, of course.
Speaker 1 (16:06):
So if somebody is watching this and they've never been
to Norway, what would you say about what is great
about Norway that would deserve their visiting? What is Washington?
Can you see in Norway? Well?
Speaker 2 (16:17):
The nature, the nature is unrivaled. I mean, it's just
like Switzerland with a little of c around it, right,
and it's absolutely beautiful. You really close to the fjord,
you close the mountains. He's good for skiing, he's good
for hiking. It's perfect and not too many people, so
it's not so crowded.
Speaker 1 (16:34):
How many total people are there in five million? Five million?
So when Alfred Nobel was awarding his developing his Nobel prizes.
He had the prizes being given by people in Sweden,
the Swedish academies, but he didn't think the Swedes were peaceful,
loving people, so he said, the Peace Prize is given
by people in Norway, So the Norway is very peaceful. Yes,
(16:57):
And you have no interest in getting into international diplomatic
things or like something like that. No, okay, And your
children are they interested in investing? No?
Speaker 2 (17:07):
Thankfully, I mean thank God for that, because I think
in my mind, you just don't want to follow your parents.
You want to create your own destiny. You wanna you
don't want to be measured against the success of your parents.
Speaker 1 (17:21):
You know.
Speaker 2 (17:22):
I don't really believe in the inheritance. I think to
inherent a little money, it's not a good thing. If
you are successful, it's just because you inherited a little money,
and if you fail, you are a total failure because
you started with a lot of money and you didn't
manage to do it. So I just think it's so,
you know, let them do what they want.
Speaker 1 (17:37):
So today, are you worried about your borders because of
what's going on in Russia and Ukraine? Is that something
you worry about in terms of the impact of Russia
Ukraine on your investment appetite for things like that.
Speaker 2 (17:50):
I'm not worried about Russia invading Norway anytime soon. We
are a member of it of NATO, we do border
to Russia. But now since Finland and Sweat join NATO,
we feel stronger than before.
Speaker 1 (18:02):
So today, what would you say your biggest investment concerns are?
You're running one point seven trillion dollar fun for the
average person to not manage that much money, what should
they be worrying about? And what are you worrying about now?
Speaker 2 (18:13):
I think you know, I think you've got two things.
One you have the known and knowns right so and
there at the top of my list would be two things.
One is inflation, because I think there is an argument
in a tate tight labor market when you potentially decline
the supply or to reduce the supply of labor in
the US you put on tariffs. These things can be
(18:34):
inflation area. And there could be a moment where, given
the high level of government debt, that the investors certainly decide,
you know what, we want a much higher coupon to
lend to, you know, to governments. And so you could
see a step up in interest rates, which could be
negative financial markets. Then of course all the AI related stocks.
The epicenter here is is Taiwan, so you need to
(18:55):
watch that. The thing that really scarce us when it
happens is the expected, you know, whether it be a
meltdown of nuclear reactors in Japan or COVID or financial crisis.
Is the stuff you cannot model, which really de raise markets.
And they come about every so often, and there will
be another one coming up.
Speaker 1 (19:14):
So I suppose I'm one of the people interviewing you
for your real application to at this job for the
next five years. What would you say is the reason
that you deserve the job. You've done pretty well, or
you like the job, or people are happy, or your
rate of return has been very good. What would you
say is the reason you should get this job?
Speaker 2 (19:31):
The organization has done well, is a real teamwork. We
built a really great team. You know, we have done
a lot of great things. Were now the most transparent
fund in the world. We've done a lot of things
like that, right, And there's always lower risk to take
the incumbent than changing. But as I said, you know,
these are just pros and cons, and well other people
(19:52):
out there who are really really excellent.
Speaker 1 (19:54):
Right, So what do you do for outside activities? Are
you a skier or you're some other kind of out well.
Speaker 2 (20:00):
I spend a lot of time in nature. I walk
in the forest, I do cross country skiing. I pick
mushrooms in the autumn. Do what mushrooms? Not the magic run?
Speaker 1 (20:14):
What do you pick them? Or you grow them or what? Oh?
Speaker 2 (20:16):
You walk around in the forest and you pick wild
mushrooms and you go home and you cook them and
you make you know, like chanto el spaghetti.
Speaker 1 (20:24):
Wow, that's an unusual I have. Wow. Okay, So generally
you just like me as a very happy person, and
I generally don't find that many happy people in the
investment world are always worried about something else. But you're
pretty happy. So how did you get to be so happy?
Speaker 2 (20:40):
Well, first of all, you have to figure out what
is it that makes you happy? And I do think
people mistake that quite often. You know, they just tried
to make more money to buy more things. That's not
where true happiness comes from. It comes from spending time
with friends and family and learning and in ternsally and
you know, as you know, I also do a podcast,
(21:02):
and I learned a lot through that podcast.
Speaker 1 (21:03):
If you're giving advice to somebody that's watching this about
how to be a good investment manager, what is the
single most important piece of investment advice you could give somebody? Learn?
Speaker 2 (21:14):
Learn, Learn, And the combination of being stubborn and agile.
You know, you have to stick with your guns, you
have to believe in what you do. You have to
be able to contrariant. But when things change, you have
to change your mind. And that's the variest combination in
investment management.
Speaker 1 (21:29):
So you think humility is better than arrogance and a
good investor, well.
Speaker 2 (21:33):
You need to be confidently confident. Humility is the magic.
Speaker 1 (21:37):
Have you ever met Warren Buffett? No? Really, and no
interest in meeting if he's called advice, But he hasn't
called you for ideas or anything like that.
Speaker 2 (21:46):
No, no, but he I haven't met him. Well I briefly.
I met him briefly.
Speaker 1 (21:51):
Okay, So is there one person that is a role
model for you? If it's not Warren Buffett, maybe it
is even though you haven't met him. Is there anybody
you would say is somebody you have as a role
model in the investment area?
Speaker 2 (22:02):
Well, I think it's difficult to not mention Bill Gates
as a role model if you are a philanthropist, because
you make a lot of money and then you are
very organized and structured in the way you give it away.
I think that's really impressive.
Speaker 1 (22:17):
Thanks for listening to hear more of my interviews. You
can subscribe and download my podcast on Spotify, Apple, or
wherever you listen.
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