Investors shouldn’t expect the bumper gains returned by the equity market so far this year to continue, the CEO of the world’s largest sovereign wealth fund told CNBC on Wednesday.
Nicolai Tangen, who leads Norges Bank Investment Management — which oversees Norway’s $2.3 trillion oil fund — was speaking to CNBC’s Ben Boulos after the fund posted a record first-half profit nearing $185 billion
But the fund, overwhelmingly comprised of equities, saw a turbulent first six months of the year. NBIM’s equity portfolio dropped 2.6% in the first quarter of the year before surging 15.98% in the subsequent three months, leading to a first-half return of 12.95%. Asked what lies ahead for markets, Tangen told CNBC that he was surprised by how well markets and economies held up in the wake of the U.S.-Iran war and renewed inflationary pressure. “If you went back two years and told me this is going to happen with the Hormuz strait, trade barriers, geopolitical tensions, and so on, I would never have thought that the market would be as resilient as it is,” he said. “Companies are very good at managing under uncertainty and under changing operating conditions, and markets have been resilient, so it’s difficult to say exactly how this is going to end up.
But for sure, we should not be expecting the same kind of returns going forward as we’ve seen over the last six months.” However, he advised investors not to jump ship on their holdings during bouts of volatility. “I would say the way to to make money is one, be very, very long term — don’t change your strategy — and be well diversified,” Tangen said. “I think that’s a good philosophy, and then you know leave it to some professionals. It’s more difficult than it looks to make money.” Much of the fund’s first-half success came from a rally in semiconductor stocks, with its top performing holdings in the first half including Samsung, SK Hynix, TSMC, ASML, Intel and Nvidia. “Chips, chips, chips, chips,” Tangen had earlier told…