Sovereign wealth funds under pressure – what does that mean for stock returns?

Stockholm, Tokyo, Frankfurt Nicolai Tangen, head of the Norwegian oil fund, had no reason to be happy when he had to take stock for 2022 at the end of January. It’s been “a tough year around the world,” he said, presenting numbers that make that statement look like an understatement.

Over the past year, the fund has lost the equivalent of 148 billion euros. With a negative return of 14.1 percent, it was the second-worst result since it was founded in 1996. “The market was negatively impacted by the war in Europe, high inflation and higher interest rates,” was how Tangen explained the poor performance.

Not only the Norwegians, but also other prominent state investors such as the Japanese pension fund GPIF made enormous losses. This is also causing a stir in Germany, as state funds are seen as a model for the share pension plan planned by the Berlin governing coalition.