Nicolai Tangen

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0:32The largest sovereign wealth fund in the world is the Sovereign Wealth Fund of Norway. It's overseen by Nikolaj Tanjen, 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 Tanjen to ask him what it's like to be responsible for a fund that large. Tell us what Norges Investment Management really does and what your job is. Well, the job is to run the Norwegian Sovereign Wealth Fund, and it has many facets. Of course, one is to lead the investment activity. It is also to develop the organization.

1:10There is quite a comprehensive kind of framework around it, working with the board, the ministry, the supervisory board. There is a council of ethics, which keeps us out of unethical investments and so on. So a lot of things involved in the role. So every sovereign wealth fund has somebody running it, presumably, but virtually no other sovereign wealth fund that I'm aware of has somebody who is 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?

1:46Yeah, that's interesting. So I had been running this company called AKO Capital for 15 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 asset management, it combines developing an organization, and also to do something good for the country. So it was just perfect. So where did Norway get all of this money? I mean,$1.7 trillion is a lot of money. Where did you get all this money?

2:24Well, you know, we'd been drilling on the Norwegian shelf for a long time. And actually, this was in 69 in the autumn, like a cold day like today. And they were on the last well. And this was Philips operating a platform called Ocean Viking. And then 2 o 'clock in the morning, this platform chief was told to wake up, you know, the guy in charge. and he's just like, hey, Stolz, why do you wake me up at 2 in the morning? He was just like, you know what? We found some oil. And it was the biggest find the world had ever seen offshore. And then this was announced to the Norwegian population on the day before Christmas Eve, 69.

3:04And so that's where it started. So if Leif Erikson 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. Could be. Could be. So let's talk about the current investment environment. As we talk 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 a global investment manager, does it really make a difference to you? Well, it's a complex question because we are a global investor, right?

3:39So 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'd be more growth. So that's positive. Now, of course, if there are lots of tariffs, our 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 inflationary, which would be bad news in the longer term. So let's talk for a moment about Norges Investment Management. When was it actually set up?

4:19The oil was discovered in, what, 1969? Yeah. All right. So when was this organization set up? It was set up in 96. And the first deposit there was like 2 billion Norwegian kroner. It's grown to 20 ,000 billion. So good growth. So now the money that comes in from the oil and you invest it, 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? Well, I would say there are 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 3 % of the fund every year.

4:56And 3 % of the fund goes into the budget. Now, the fund is now so large that it accounts for 25%, or between 20 and 25 % of the state budget. But I think it's very good to have that rule in place. All right, so 25 % of the government's budget comes from what you do every year. Yeah, and my 700 colleagues. How many people actually work for you now? Well, so we've got roughly 700. We've got 100 in New York, 140 in London. We've got 40 in Singapore, and the rest would be in Oslo. So do 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?

5:34Because that will affect Norway's government? Well, not only every day. We have it on our website. We have a ticker which shows the real value of the fund at all times and it's updated 13 times every second. So that's a lot of pressure. Every hour people are paying attention to what you're doing. Absolutely. 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 a hundred million dollars in something? Or is it you're just doing strategic things and you're not making individual investment decisions?

6:08Well, since it's such a large front, you need to be pretty indexed near 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. 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? That's exactly right. So we always make mistakes and that's always in the papers. Because either you have too much or you have too little. Or, you know, when you own a bit of 9 ,000 companies across the world, there is always something going wrong somewhere and we always own it.

6:48and so we are always criticized. 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 are a couple of good ideas? No, I think if you are a long-term investor like we are, you want to be widely diversified across asset classes, across geographies. It's very, very tough to do this tactical asset allocation. 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, it would be to sell the U.S.

7:22tech 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 contrarian and you are different from your benchmarks and so on, there will be periods where you underperform and everybody is going to question your sanity. What about artificial intelligence? Is that a good area to invest in now? It has been fantastic and we have made a lot of money for the fund. And, you know, the biggest contributors of the last few years have, of course, been the big American AI companies. And I polled people in Norgus just before Christmas when I asked them, how much more efficient are you now because of the new tools?

7:59And on average, people thought they were 15 % more efficient. Really good. So, NVIDIA is still a good stock to buy? Well, that I don't know. But for sure, they make good products. When you look at your investment team, do they come in every week and say, here are some ideas we have? And do you tell them yes, no, yes, no? Or do you just listen to what they recommend? Well, they would decide. I think, you know, in order to really judge how they're doing, they need to be totally accountable. And you can't interfere in the investment process. So I don't interfere in their investment process. 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.

8:38Is that the case in Norway? No. So you don't really care what the U.S. is doing in this regard? Well, there is clearly a backlash against ESG, right? But the policies we have, they are anchored in the parliament, and so we are not changing our mind. We think it's important with climate reporting. We think diversity is good and so on. In most Scandinavian countries, I think certainly in Norway, there's concern 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 carbonized kind of chemicals and fuels, but you really don't believe in that to some extent?

9:19How do you square that? Well, we believe in it. And we do think that, in particular, the gas that Norway produces, which is a very high proportion of the gas supply in Europe, is very, very important. And it continues to be a big part of the energy supply and important for security for many, many years. Hiscox Small Business Insurance knows there is no business like your business. Across America, over 600 ,000 small businesses, from accountants and architects to photographers and yoga instructors, look to Hiscox Insurance for protection. Find flexible coverage that adapts to the needs of your small business with a fast, easy online quote at Hiscox.com.

10:00That's H-I-S-C-O-X dot com. There's no business like small business. Hiscox Small Business Insurance. Let's talk about your own background. You weren't just working your way up in the government of Nordisk Investment Management. You were very successful, as I said earlier, in the private sector. Where were you born? I was born in a small town in southern Norway, Kristiansand, which not many people have heard about. And were your parents investment managers? No. My mother worked in the public sector with museums and art, and my father was an entrepreneur. And where did you go to school? I started off in Norway.

10:39I 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. Is it unusual for somebody in Norway to go to college at Wharton School in Philadelphia? It's a great school. Yeah, it's pretty, it's not so common. So when you went to Wharton and you said you're from Norway, do people in Wharton say, where is that? Yeah, of course. 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.

11:17You set up your own headshot. I mean, the cool thing is, you know, you come from Norway, which is like a very egalitarian 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 Klaus Mundane. It's just like, hey, what do you guys want to do? I just want to conquer the world. And everybody applauded. I didn't say that. but somebody else said and you know people applauded and it was just like a mindset totally different so you didn't find a lot of humility at Wharton not so much so okay so you graduated didn't you go into the private sector right away yeah I went then became an analyst with a stock working firm I was went there I 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 where was it based London when did you say I'm gonna start set up my own hedge fund well so that was a bit afterwards because I had worked for this hedge fund for five years, made some money, and I took a break.

12:09So I did a master's in art history, but realized I wasn't very good at it. How do you know you're not good at art history? I mean, you don't measure it the way you do investments. Well, you get feedback from the professor that you are not the brightest thing, okay? So I thought, hey, I'm better at looking at stocks than paintings, and so let's set up this firm instead. But you've built a big art collection, so you must know something about art. Yeah, but it's easier to buy art than write about art. Okay. So you set up your own hedge fund eventually. Yeah. And how big was it before you stopped it?

12:42Just under$20 billion. 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. So you have$20 billion hedge fund, and you're averaging rates of return, I assume, that are in double-digit kinds of areas, right? And so when you got this opportunity to run Norgis Investment Management, did you say to your family, guess what, I'm not going to be making that much money anymore and we have to live more conservatively? Yeah. And what did they say? They were happy with that?

13:13Yeah. Wow. I've got enough money to buy food and shoes. 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 other things. Yeah, and I think that's a misconstrued perception of what happiness is. In my mind, happiness is about learning. That's how you measure happiness, is how much you have learned. Some people say, you measure success by who's got the most money when they die, and I just think that's totally a failure. I mean, the person who's got the most money when he or she dies, they have lost. They haven't got it.

13:48Uh-oh, I didn't realize that. Well, you've done this. All right, so that's something I've got to learn. But okay, so you set up your hedge fund, but when you left your hedge fund, did you have other people running? Is it still around? Absolutely, still around. So it was a fantastic thing. It's been a great transition to the next generation. Really, really nice. They are doing better than ever. And it's just a total win-win. But when I left for the position in Norway, I had to give away my ownership stake. So I gave it to a charitable foundation. And so the stake in the hedge fund is funding that charitable foundation.

14:25So you did so well that you actually joined the Giving Pledge. Yeah. Right, which means you've got a net worth of at least a billion dollars or so. Are you the only person in Norway that signed the Giving Pledge? There's 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 really running the Norway Sovereign Wealth Fund, or people don't talk to you about what you do now? No, no, they talk about that too. So, do you ever go to reunions at Wharton and say, hey, I wasn't bragging? I was on the board at Wharton for some time, yeah.

15:00But I guess they ask for contributions from time to time. Yeah. And, okay. I did give them a building. But all the people in your class who were 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 that actually did it and you didn't brag about it? You don't say that? I never felt that I conquered the world. No. 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. I applied. I applied last week. You applied. Okay, did you have to apply?

15:33You already have the job. No, it has to be you have to apply again. So I updated my CV and applied. Wow, okay. Did anybody else apply? Yeah, I think so. I mean, I don't know. I don't know. When it comes to this, I'm very, very humble. So 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. If not, I need to do something else. So you're willing to do another five years. Yeah. And your compensation as the person running it is modest, I assume, compared to what you used to make.

16:09Yeah, it's a well-paid job. But it's, of course, it's a public sector job. 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. No interest in that? No. And what about anything after you're finished? Let's suppose you do another five years. Yeah. And for 10 years of this, you probably would say that's enough. 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, do another degree, learn some more things. Art history, but you're not that good at that, so you would do something else.

16:47No. But you have a big art collection still. In what area do you collect art? 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 it was one of the 50 most important places to go in 2025, so you all have to go, of course. 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 can you see in Norway? Well, the nature is unrivaled. I mean, it's just like Switzerland with a lot of sea around it, right? And it's absolutely beautiful.

17:25You're really close to the fjord, you're close to the mountains. It's good for skiing, it's good for hiking. It's perfect. And not too many people, so it's not so crowded. How many total people are there in Norway? 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. Yeah. So Norway is very peaceful. Yes. And you have no interest in getting involved in international diplomatic things or something like that?

18:02No. Okay. And your children, are they interested in investing? No. 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 don't want to be measured against the success of your parents. You know, I don't really believe in inheritance. I think to inherit a lot of money is not a good thing. If you are successful, it's just because you inherited a lot of 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.

18:37So 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 and Ukraine on your investment appetite for things like that? I'm not worried about Russia invading Norway anytime soon. We are a member of NATO. We do border to Russia. But now, since Finland and Sweden joined NATO, we feel stronger than before. So today, what would you say your biggest investment concerns are? You're running$1.7 trillion fund. For the average person to not manage that much money, what should they be worrying about and what are you worrying about?

19:13No, I think you've got two things. One, you have the known unknowns, right? And there at the top of my list would be two things. One is inflation because I think there is an argument in a tight labor market when you potentially decline the supply or reduce the supply of labor. in the US, you put on tariffs. These things can be inflationary. And there could be a moment where, given the high level of government debt, that the investors suddenly decide, you know what, we want a much higher coupon to lend to governments. And so you could see a step up in interest rates, which could be negative financial markets.

19:50Then, of course, all the AI-related stocks, the epicenter here is Taiwan, so you need to watch that. The thing that really scares us when it happens is the unexpected, you know. Whether it be a meltdown of nuclear reactors in Japan or COVID or a financial crisis, it's the stuff you cannot model which really derails markets. And they come about every so often, and there will be another one coming up. So let's suppose I'm one of the people interviewing you for your reapplication 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.

20:29What would you say is the reason you should get this job? The organization has done well. It's a real teamwork. We've built a really great team. We have done a lot of great things. We are 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, there are just pros and cons, and there are other people out there who are really, really excellent. All right, so what do you do for outside activities? Are you a skier or some other kind of outdoor activities? Well, I spend a lot of time in nature.

21:02I walk in the forest. I do cross-country skiing. I pick mushrooms in the autumn. You do what? Mushrooms. Not the magic ones, the ones you eat. Yeah, I was wondering. What do you, you pick them or you grow them or what? No, 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 chanterelle spaghetti. Wow, that's an unusual... Wow. Okay, so generally you strike me as a very happy person. And I generally don't find that many happy people in the investment world. They're always worried about something else, but you're pretty happy. So how did you get to be so happy?

21:40Well, 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 try to make more money, try 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 terms of learning, as you know, I also do a podcast, and I learn a lot through that podcast. 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, learn, learn.

22:15And the combination of being stubborn and agile, you have to stick with your guns. You have to believe in what you do. You have to be able to be contrarian. But when things change, you have to change your mind. And that's the rarest combination in investment management. So you think humility is better than arrogance in a good investor? Well, you need to be confident. Confident humility is the magic. Have you ever met Warren Buffett? No. Really? And no interest in meeting him? He hasn't called you for advice? He hasn't called you for ideas or anything like that? No? No, no. I haven't met him. Well, briefly.

22:50I met him briefly. 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? 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. Thanks for listening. To hear more of my interviews, you can subscribe and download my podcast on Spotify, Apple, or wherever you listen.