(Bloomberg) -- Norway’s $1.7 trillion sovereign wealth fund reported its biggest loss in six quarters in what was a roller-coaster period for markets globally, with the decline largely caused by a drop in the value of technology companies.
US equities have underperformed global peers amid concerns that US trade policy and tariffs will damage economic growth. Still, Chief Executive Officer Nicolai Tangen said the fund will increase investments in US stocks, according to its mandate set by the Finance Ministry.
“Large American companies are great long-term investments, so we are very happy to be invested there,” Tangen said in an interview on Bloomberg TV on Thursday.
Norges Bank Investment Management reported a loss of 0.6% on its investments, an equivalent of $40 billion, in the first three months of the year, it said in a statement. That was the largest decline since the third quarter of 2023 for the world’s biggest single owner of listed companies.
The fund, which for the most part tracks a bespoke index, lost 1.6% on stocks — mainly driven by the tech sector — in what it called a quarter “impacted by significant market fluctuations.” Fixed-income investments gained 1.6%, helping the investor exceed its benchmark by 0.16 percentage point.
The fund is tech-heavy, with Apple Inc., Microsoft Corp., Nvidia Corp, Alphabet Inc, Amazon.com Inc and Meta Platforms Inc among its biggest investments. It also owns shares in Tesla Inc.
Those holdings have in the past generated stellar returns, including 13% last year. The fund’s been underweight those stocks for about 18 months, Deputy CEO Trond Grande told reporters.
The worst of the recent markets turmoil following US President Donald Trump’s sharp increase in tariffs in early April is not reflected in the first-quarter earnings.
“We’re potentially going into a more inflationary position,” Tangen warned on Bloomberg TV. “It’s an obvious consequence of higher tariffs” and “really negative for markets.”
NBIM is “neutral” to the US treasury market, Tangen said, adding that it has not “reduced or increased positions” in those assets.
Because the fund is mainly index-driven, there’s little room for active investment. But there’s a bit more leeway the fund can use and that “can be nice to have” in tumultuous times, Grande, the deputy CEO, told Bloomberg. The fund’s benchmark index is based on the FTSE Global All Cap Index for equities and Bloomberg Barclays indexes for fixed income.
The government deposited 78 billion kroner ($7.5 billion) into the fund during the quarter.
The fund follows a set of ethical guidelines, which contain criteria for the exclusion of companies based on their products or conduct, serious violations of human and labor rights, as well as contribution to severe environmental damage. In addition, the rules exclude investments in companies that produce certain weapons, such as nuclear arms and cluster bombs.
Norway’s opposition Conservative Party has argued for changing the guidelines to include investments in companies manufacturing nuclear weapons, saying it’s illogical to restrict the wealth fund from investing in businesses such as Lockheed Martin Corp. when Norway buys products from them.
The fund owns stocks in more than 8,600 companies globally. Norway’s Finance Minister Jens Stoltenberg recently announced it will seek to reduce that number by selling off many small cap firms in emerging markets. Given the fund’s size, such changes take time to work through.
(A previous version of the story was corrected to remove drop in fund value in fifth paragraph.)
--With assistance from Stephen Treloar and Ott Ummelas.
(Writes through with comments from Tangen.)