Inflation hurts investment outlook, Norway sovereign wealth fund CEO says

OSLO (Reuters) – Norway’s $1.5 trillion sovereign wealth fund faces growing obstacles to earning a return on its investments amid persistent inflation, already-high market valuations and geopolitical tension, its CEO said on Tuesday.

The Norwegian Government Pension Fund Global, the world’s largest sovereign wealth fund, invests proceeds from the country’s oil and gas industry in foreign stocks, bonds, real estate and renewable energy assets.

“The biggest challenge is to generate return in a world which is becoming difficult,” CEO Nicolai Tangen of Norges Bank Investment Management, which operates the fund, told Reuters on the sidelines of a business conference in Oslo.

Reducing inflation may turn out to be more difficult than many had anticipated as wages grow significantly in many parts of the world and climate change continue to impact the price of goods, potentially impacting monetary policy, he added.

“I observe that a lot of investors and economists are very optimistic about the speed of interest rate declines, and I’m not so sure that’s going to happen,” Tangen said.

(Reporting by Nora Buli, writing by Terje Solsvik, editing by Stine Jacobsen)