ladies and gentlemen, it's an honor to introduce two outstanding figures. First, Nicolai Tangen, he is interested with managing almost $2 trillion dollar of Nor West wealth.

with degrees in both art history and psychology, Nicolai's background is unique, he has been a chef, Russian translator, and even worked in intelligence.

but his expertise in economics hored at Borton lay the groundwork for his success as a hedge fund manager.

for the past four years he has been at the helm of Norway Sovereign wealth fund, guiding it with integrity and skill.

Joining him is Dr. Adam Poen, president of the Pet Institute for International Economics.

The Atlantic once suggested Adam belongs in an Allstar $10 billion lineup if there were a Central Banking fantasy league.

He's one of the most respected voices in international economics today.

So we are grateful to Adam and the Peterson Institute for partnering us on this event and I look forward to hearing Nikolai's opening remarks.

Please, thank you, uh, Ambassador and ladies and gentlemen.

To understand, um, the Norwegian Sovereign Wealth Fund, we need to, uh, go back in time and, um, we need to go back in time to 1969 and, uh, roughly the same time of the year as we are now.

But not in, uh, sunny, warm Washington, we are out on the Norwegian shelf, it's cold and we are on board Ocean Viking.

And this is Phillips Drilling and they have been drilling for quite some time, they haven't found a single drop of oil.

And they're now drilling the last well and if they don't find any oil, they have to pack up the toys and go home.

And then two in the morning, um, the, um, this guy called Salvon is asked to wake up the platform Chief at Seaborn.

And at Seaborn is like, Salvon, it's two in the morning, you better have a good reason for waking me up.

And did he have a good reason? They had just struck oil, they found the Ekofisk field and it was a largest field the world had ever seen.

Then this was presented to the Norwegian people the day before Christmas Eve 69.

And the question was, was this a Christmas gift or not?

Because we had seen in many countries that finding oil and these incredible resources had just been a curse.

You know, it had led to crowded out of Industries, led to huge amount of corruption, it had just not been very good.

And so then the Norwegian politicians decided on something really clever, let's put it into a fund.

And this is the first deposit into the fund in 96, two billion Norwegian coroner, you know, a small deposit and nobody thought the fund was going to be particularly big.

And the idea of course with the fund was to take the the, uh, the, the, the wealth from the shelf and put it into Financial assets and that's what be done.

As you can see, the dark blue is the money that, uh, we put into the fund and the light blue is the returns that we have made in financial markets.

And then we have some currency effects at the top, but you see that the returns that we made in the financial markets are now twice as large as the money we put in.

So in a way, we found oil twice, once on the continental shelf and then again in financial markets.

The governance structure of the fund is very important.

So the money is owned by the Norwegian people of course, uh, taken care of by the the parliament.

The parliament have, uh, given the mandate to the Ministry of Finance, so it's the Ministry of Finance which is our client.

And we have a representative here from the ministry today, Espen, who is, uh, you know, in a way my boss.

Um, and then they have given the Mandate again to Norges Bank, to the Central Bank and they again have hired us, the Norwegian, uh, Norges Bank Investment Management, to run the fund.

There are, um, some very important reasons why this, why this has worked out really well.

Um, I would say one of the things is a very strict and good mandate that we have from the ministry.

It's quite detailed about how we should invest and I'm coming back to that, uh, but it is important to have a strict mandate and that has worked really, really well.

It's useful to be situated inside the central bank and I think it will be increasingly important potentially going forward.

Um, and then we have, uh, then is, of course, it's important that we work with the board, the board works with the ministry, that we have contact at all levels, but of course that we also at the same time understand what the roles are and who is accountable for what.

So I think this has been, um, a really, really good model.

Another reason why it has worked so well is because of wide political anchoring.

And here this is from a seminar we had this summer, three, um, ministers, they had been Ministers of Finance, uh, all three of them or treasurers and, um, they span a very broad political span.

We here have from, uh, from kind of, uh, the Socialist left party to, uh, the Rtist party to The Agrarian party and, um, they have all agreed on the main, uh, uh, kind of characteristics of the fund, they have agreed on the risk profile.

And every year we have a white paper that goes to the, uh, to the parliament so that all changes in the Mandate is agreed on by all political parties.

I think it's totally key so that when you change Parliament or government, there is no change in the main ramifications for the fund.

We invest across the world and I think a fund of this size needs to be really widely Diversified.

We have, uh, now half the money in, uh, America, actually a bit more, a third in Europe and then the rest is spread across the rest of the world.

We started off by a larger proportion in Europe, that was kind of closer to home and it was a bit less risky.

Then, uh, gradually we have moved more assets across, uh, to the US, that's also of course because the US market has developed particularly strongly now lately driven by, uh, you know, all your wonderful technology companies.

And in terms of the asset split, we have now 70% equities and the rest is, uh, spread mainly fixed income, but also, uh, real estate.

We own some amazing properties here in DC, we have main Holdings in New York, Boston, uh, in London, Berlin, Paris and so on.

Um, and the, uh, it, it started off by being purely in bonds, then during the financial crisis the equity ratings went from 40% to 60% and has subsequently moved to, uh, to 70%.

And then three, four years ago, we also got the unlisted renewable infrastructure mandate.

Which in the beginning we were pretty slow to deploy because we thought, uh, that valuations were very high.

Now we think it's much more attractive like there is less demand for, uh, renewable infrastructure projects, we think returns are better.

And so now we are have accelerated the the deployment of a money into that asset class.

So we are one of the largest single shareholders in the world, we own one and a half% of all the listed equities.

And you know, I kind of think every time you buy a Starbucks or new sneakers or, uh, you know, new car or whatever, I feel pretty happy about it because we get 1 and a half% back.

Um, in Europe, we own, uh, just under 3% of, uh, of all the equities.

Now how do we think as an owner, owner?

Well, we have, um, very clear expectations when it comes to companies and I think when you engage with the companies what is important, important is that you are predictable.

I think predictable is the most important thing.

Um, we, um, have clear expectations, we have expectation documents on the most important parameters.

We have expectation documents when it comes to how companies should, uh, treat corruption, how they should think about, uh, labor, how they should think about, uh, human rights issues and so on.

And so we have 10 expectation documents which lay out in in great detail how we think they should, uh, behave.

We have portfolio managers who are Specialists on this companies, they meet with them on a regular basis and have conversations about all kinds of things from labor rights, um, to, uh, disclosure levels, um, climate plans and so on.

And then lastly, voting, what voting is in a way one of the most important ways we can influence companies.

And so we attend, um, nearly 10,000 AGMs every year, AGMs is a bit like this, uh, meeting where all the shareholders come together and we vote on more than 100,000, 100,000 proposals every year.

Now we of course have the votes that we own ourselves, one and a half%, but what is interesting is that we have so many other shareholders across the world who look at how we vote.

And now we disclose our voting intentions 5 days ahead of time, so we have an additional three percentage points of votes which follow us so close to 5% of against votes in the world would be influenced by, uh, our decisions.

So it's a huge responsibility and it means that we, uh, take well care on how we vote that it is consistent that it's well communicated, uh, to the companies.

Lastly, um, transparency, very, very important.

We are the most transparent Fund in the world and that's not just a claim because actually there is a world championship in transparency.

Uh, now for several years we were lagging, uh, the Canadians, we thought, we think it's kind of okay to be beaten by the Canadians in ice hockey, but not in transparency.

So last year we cranked up the efforts, uh, we won for the first time and then last week, uh, we won again.

And it's, it's really, really important because what we see is that transparency and knowledge creates trust.

And so we are transparency with the Norwegian people, we are the only fund which closes all of our Holdings twice a year and pretty much everything we do is out there.

So to conclude, in my mind, this is sex Factor for the fund has been, you know, a clear and good mandate from the ministry, it's been broad political anchoring, it's been a spending rule which decides how much we can take out of the fund every year and that's Limited at, uh, 3% and then lastly, it is the transparency.

Thank you and then Adam we going to have a chat here, thank you.

Adam: Okay, thank you Nikolai, um, thank you all for coming out.

When the embassy approached, uh, the Peterson Institute to host Nikolai, we were all like, oh my God, yeah, sure, great.

Um, and then then the embassy was like, and we'll pay for the food, I was like, oh yeah, sure, great.

Um, but then they said it's going to be on Monday, November 11th and I was like, you're bloody kidding me, right?

Um, but obviously the fund, their CEO, uh, the prospects for long-term thinking, uh, this is all very attractive to people and so that's why we have such a distinguished crowd and such a full crowd tonight.

So thank you all for coming out, I'm going to ask Nicolai a few questions and, uh, have a bit of a discussion and then we'll open it up to the audience.

Nikolai, why don't we dive right into it?

Um, you and I were talking briefly before your remarks and you were saying how this is a really interesting time to be an investor.

Um, there's geopolitics, there's technological change, there's climate change.

How does is come together for you?

Nicolai: Yeah, I think, um, um, climate, geopolitics, technology and finance are intertwined in a way that we have never seen before and it started to happen probably four, five years ago.

Where for the first time we saw, if we just take the various links here, um, first of all, the link between, uh, climate and finance is becoming increasingly clear and it's mainly because of harvests which are getting worse and worse.

And so you are seeing increasing prices for everything from, you know, cocoa beans, uh, chocolate, olive oil, orange juice, all these kind of things is really underpinning inflation which of course is one of the biggest threats to, you know, stock markets.

So that's a new, that's a new one and I think the link is just becoming stronger and stronger.

Then we see technology and finance, we see it of course because what is driving the markets these days is mainly the technology companies and they are just getting bigger and bigger.

And so we are seeing a concentration in the stock market which is bigger than we've ever seen before and it's driven by many things.

I mean, one is that in society generally we have a Winner Takes It All situation.

You know, that are more people now listening to Taylor Swift than everybody listening to Jazz and classical music combined, right?

So you see it in sport and you see it in finance, you see it in technology companies more than in other companies.

Because just the fact that you are big makes you even bigger.

The reason why you order an Uber is because there are so many of them, they come straight away.

The reason why you on Facebook is because there's so many people on.

And then in AI, you kind of turbocharge that again because these models are so expensive to develop that you need to be very big to really make something out of it.

So that's kind of the technology impact on the stock market.

Now then you have technology impacting geopolitics, you know, the relationship between China and the US very much, uh, impacted by technology export controls, uh, these kind of things.

And um, impacting now, um, research in so many new areas, two of the Nobel prizes over the last few weeks have been driven by AI, both, uh, physics and chemistry.

So, uh, it's really just changing the Landscapes.

And then of course you have the the geopolitical situation which is new, so all this is coming together in in a totally new way.

Right, which means that when I wake up in the morning, I'm just like spinning out of bed because you don't want to spend time in bed when you can read the papers and look into what's going on because it's just so exciting.

Adam: So if the trends are clear in a sense that the incumbents, the large players, the the already technologically advanced, the already networked are going to get bigger and bigger, why are you reading the papers?

I mean, is there any possibility of deconcentration? Um, is there disruption the US can do to China or vice versa that would change the game?

Nicolai: Now what is, what is of course, um, in a way, uh, interesting here as well is that the largest companies are linked into the same geopolitical risks, right?

Um, now you look at the for instance the biggest gainers we had in the portfolio in the first half of this year.

So you have ASML in Holland, they make the machines to produce microchips, they sell them to, uh, to, you know, one Taiwanese company.

Uh, the chips are, uh, the most advanced chips are designed by Nvidia of course and I sell them to the super, uh, you know, scalers, so Meta, um, you know, Amazon and so on.

And so, um, it's very concentrated in terms of the risks we are seeing, you know, it's, um, geographically quite concentrated.

And if something happened, it impact most of the, uh, Supply chains for most of the kind of things that we consume.

So it's, um, at a time where we have in a way more concentration than ever before, it's linked to one geopolitical situation in a way that we also haven't seen before, so that's that's, uh, exciting.

Adam: How can a fund like yours in a sense hedge or take advantage of these geopolitical risks?

Nicolai: No, you want to there, um, the important things here is one that you have, uh, that you are broadly Diversified across the world, across asset classes, uh, very important.

The second thing is you need to have a long-term time Horizons so that if you do have, um, volatility in the market, you can take advantage of it.

So I think the, uh, I think those are the the most important things.

Adam: Um, Norway, another part of the Norwegian government as it were, um, as the Ambassador represents here, um, has been pursuing a pretty strong foreign and security policy, worrying about Russia, leadership in NATO alliance with the US, it's part of that.

Um, what, what happens down the road, what happens if there are great opportunities in China or Russia and the foreign policy of Norway is, let's say, concerned about the behavior of Russia or China?

How do you, how do you, is there a statute on how you have to deal with that or is this a judgment thing? How do you think about that?

Nicolai: Yeah, so, um, one another important thing is that, um, the fund is not a political tool, very, very important.

We have one goal and that is to make money, right, in a responsible way and with a set level of risk.

But it's very, very important that we are not used as a political tool.

As long, when you start to get like several goals, you are not really accountable anymore and you can always blame, uh, lack of results on something else.

So I think that's, uh, I think that's really key.

Now when it comes to to Russia, um, in a way that was the first time that, um, that the parliament, uh, made a political decision about the fund, we were told that we were to sell out of Russia.

But I think that was quite an extreme situation, we don't expect, uh, that to be repeated anytime soon.

Adam: Just more broadly, maybe it's the parliament in your case, but there's also consumer investor demands for more concern about green issues, about investment in so-called dirty Industries.

One of the issues, one of the many issues where, uh, the incoming Trump Administration is likely to differ from the past administration is trying to diminish some of the environmental regulations and standards in the US.

Um, how does, how do pressures over green affect you? Does that count as political?

So you, it's only if the parliament overrides or do you mention the importance of the climate transition? I mean, how do you think about this when there's demands for response?

Nicolai: Yeah, I would say that we, um, um, we follow the instructions from the parliament.

Um, the Norwegian Parliament is, uh, unified in believing that climate is important and that we should, uh, in constructive dialogue with the companies, um, try to be supportive for their, um, for their work, uh, towards an n z world.

And so that's what we are doing, so we, um, have not changed our mind or our way of working, we continue to be, uh, persistent and, um, and predictable.

Adam: It was very striking in your opening remarks at least to me, um, your slide talking about active but not activist and you're saying that you want to be predictable and you just said it again.

Where, I mean, since you are the most transparent fund, congratulations, where are some examples of where that kind of interaction with companies you have stake in have made a difference?

I mean, where have you been active but not activist that you think you've had a good influence? I me good however you define it, but where you've had an impact?

Nicolai: Yeah, um, oops, well, we do see, um, we do see that where we engage and where we talk to companies about, uh, the importance of having a, um, you know, a carbon production plan, we see that more companies have plans.

Um, and so that's a development that of course we are, we are not the so reason for that, but we, we can see a relationship between engagement and results.

We see it again, we have been advocating the fact that the chair and the CEO should not be the same person, we think it's good governance and we are used to that from Europe that it should be to different people.

Uh, in the US over the last 10 years, it's gone from 45% of companies who have, I mean, which have kind of the combined, uh, function in one to 35, so 45 to 35 over 10 year period.

So that's have had some impact.

Where we have had no progress whatsoever is on, uh, pay packages.

Um, now what we do, we are not, uh, we are not, uh, against High salaries, but they need to be, uh, they need to be in line with our interest, they should be long-term, they should be tied to results, they should be Equity based and so on.

And so we got pretty clear, uh, expectations for how that should be structured, but, um, but you know, pay packages are continuing to move up.

Adam: Um, another one of the slides you put up, you, you had a pie chart about the, uh, asset allocation across four classes, uh, equities, fixed income, real estate and unlisted energy, I think it was.

Um, we have seen in recent years another Financial trend is more and more companies going private at least in the US, but I think elsewhere as well.

Um, fewer and fewer companies listing publicly, how does this affect the funds thinking?

Is this something that you're going to react to by taking more private investment placements? Is this something you view as an opportunity because you have thinner public markets and you can get more of what you want?

I'm not trying to feed words in your mouth, I'm trying to ask you know, so just as one of the world's leading investors, how do you think about this trend?

Nicolai: Yeah, well, you're right, there are fewer companies being listed on a socket ex change and amongst the ones listed, it's more concentrated.

Yeah, so fewer companies account for more and more of the index and so there is a much higher risk in the stock market from that point of view than what's been the case before.

I would probably argue that there is more risk in the listed market now than in the unlisted.

We are not, uh, it's not in our mandate to be in, uh, private Equity.

It's something that the fund has suggested several times and there is now a political process where, um, they will investigate further whether we should be allowed to do that.

There's been questions about fee structures, the general opinion in Norway is that the fees are very high and that transparency has been low and that esfg considerations have been low.

Now I think for sure transparency has been improving and ESG considerations have been improving and corporate governance have been improving, so we'll see what, um, we'll see what they come up with.

I mean, it's a, it's a good process, um, I actually think personally, it's probably a good time to scale into, uh, you know, private, private Market because, um, they, they are, they are having a tough time.

I think you can get pretty good, uh, fee deals and, um, and you can also get get positions in the in the secondary market.

So it feels a bit like increasing the, uh, equity share during the financial crisis, that's the way it feels to me, potentially with private Equity.

Right, but we'll see, nothing is decided.

Adam: Very good, um, I'm going to come to the audience for questions in the next few minutes.

Um, we have with us tonight Ted Truman who was one of the leaders in the effort to get Sovereign wealth funds to have standards of transparency.

Um, obviously there are some very large funds that do not not get a successful rating and transparency as you or the Canadians.

Um, but in general, I mean, is is the transparency something that makes you more accountable? Is the transparency something that makes you more palatable in when you're investing abroad?

Is transparency an unalloyed good for a fund?

Nicolai: Yeah, I mean, on the one hand, we got one investor, on the other on the other hand, we kind of got five million investors, right, because, um, it's owned by the citizens.

Uh, I think it's key to trust, I think it's key to trust.

Um, I just love transparency, you know, I think it means that you, you stick to what you're supposed to do, you are accountable, you get everybody to run in the same direction, everybody knows knows what we are about.

Um, so I, I, I see no, the only, the only reason why why transparency could be negative would be if people started to trade against your positions.

And that's why we think disclosing them every every six months is is right, but more frequent than that would not be would not be very sensible.

Adam: So my final question before I open it to the audience is about the purposes and the capacities to make a sovereign wealth fund work for our country.

I mean, you spoke about you have the beautiful repeat image of was it 1969 discovering oil in the last well at 2 am.

Um, but so then there's a very compelling story, right, that the oil is going to run out sometime, our country needs to accumulate.

People have started talking about the US should have a Sovereign wealth fund, um, which strikes me as kind of odd because we don't have the surpluses you do.

I mean, when is a sovereign wealth fund a good idea for a country?

Could it be a country that, you know, like Denmark doesn't have oil, but has, uh, anti-obesity drugs and they should run a sovereign wealth fund off that?

I mean, what, what, what, what countries should be following your example?

Nicolai: Yeah, I mean, in way they have a so wealth Fund in Denmark as well, but it's called the Nova Nordisk Foundation, right, which funds, uh, research and a lot of incredible things.

Um, and in a way they kind of have them in Sweden too through the Woolenberg sphere and some of their, uh, foundations.

So that's kind of the starting point and then I would say what's worked for for us in Norway is, um, uh, broad anchoring of the Mandate, a spending rule which by the way was made by by Yen Stoltenberg, um, ex, um, Secretary General of NATO when he was the Minister of Finance and prime minister, um, and then and then the, um, and then the transparency, I would say.

Adam: Yeah, sorry, one final question then, um, a number of us, uh, economists at least and some Finance people have commented on the idea that the equilibrium interest rate, the let's say the 10 average 10-year interest rate on safe government debt is rising.

Partly because of fiscal excess, partly because of productivity growth, but variety views it's rising.

If we're going to be in a persistent High rate or high higher rate environment, how does that affect your thinking about your allocations, your investment?

How does that affect the draw rule? I mean, should Parliament be revisiting the 3% three and a half% based on what the interest rate is or is that something should just remain fixed?

Nicolai: Well, sometimes, um, having, uh, an unchanged rule in itself has a very strong value, right?

So instead of kind of fine-tuning it, changing it often to have something kind of set in stone, it's a really good thing.

So I'll be surprised if that rule was Revisited anytime soon.

Adam: Okay, not going to get a conceptual answer, but a very clear answer, um, let me open it up, uh, who would like to ask a question?

Please say your name and identify yourself when asking a question.

Audience 1: My name it's an X World Bank, one question related to what your answer was, but context is how is the different what is the difference between your governance and objective from some of the Middle Eastern fronts like the Saudi fund or the UAE qat or the other side which is very much in the news here University end government funds which are also public just to make it more specific to the current debate you talked about ESG the financial sector has latched on to ESG indicators but almost all the academic research including two NBR papers this week show that ESG is used more as an enrichment of the CEO rather than having any real impact so what is your view on that?

Audience 1: you talked about ESG the financial sector has latched on to ESG indicators but almost all the academic research including two NBR papers this week show that ESG is used more as an enrichment of the CEO rather than having any real impact so what is your view on that?

Audience 2: Dorth from the mil Institute, my question specifically was I think most us asset managers and allocators share your strong convictions on climate over the long term, but they bought up against fiduciary duty here in the United States.

You can't generate or demonstr unless you can demonstrate quantifiable Alpha, you can't say climate investing generates Alpha.

So if you could speak to maybe the US managers allocators who might want to allocate more towards climate but but up against rfcc but up against fiduciary duty what are some of the tangible specifics in terminal value or multiple expansion whatever it is, uh, when you make your assessment probably more towards the med?

Nicolai: Okay, so, um, comparison with other soan wealth fund, it's fair to say that, uh, some of the funds we don't know so much about it, right, because they are quite secretive and not very transparent.

And, uh, you know, even a fantastic fund like GIC in Singapore, they, they report their Returns on a rolling 20-year basis and they don't disclose assets, right?

So so it's difficult to know sometimes.

But, um, no, many of them are really, really great firms.

Um, it's uncertain to me sometimes whether they are part of the foreign policy of the country or whether they are, uh, have a goal of just, uh, trying to generate the highest possible Financial returns.

Uh, we don't know, some of them are spending money domestically, we don't do that, we only spend money outside of Norway.

Um, the whole point was to to kind of keep the capital outside, not to distort, uh, the domestic economy and, uh, and the currency.

How we compare with us endowments? Well, you have some amazing endowments in this country, right?

Um, and I have in my previous life been managing capital for many of them, I would say the main difference they probably, um, they are more into alternative assets, uh, they are using more external managers, they are, they are, uh, you know, quite comfortable by paying, uh, quite High fees because they really look at net returns.

And in our part of the world, we have a problem paying big fees, right, it's just something we really don't like.

And then, uh, ESG, yeah, well, for sure, I would say that ESG has nothing to do with enriching CEOs, I, I, I really don't see that link.

Um, and also kind of, um, combining that the thing is that if you, if you own 20 companies, you don't really necessarily have to care so much, but if you own the whole world like we do, you know, one and a half% of the whole world, if you have one company polluting, ha, you pick it up in all your other Holdings, you have to care.

And if you hear if you have like a 5200 year investment Horizon, you definitely have to care.

Uh, and as we talked about earlier, you know, the link between climate and inflation is is clearly there.

Uh, we see it now in, we do see it in reinsurance rates, they're going up.

We do see it in productivity in some parts of the world, you cannot work in the middle of the day because it's too Hal, right?

So you are, you are seeing it in many in many different ways and I, uh, you know, we argue that, uh, that it is a Financial Risk.

Adam: Thank you, um, hey, great all these question, yeah, I know it's fine by me.

Audience 3: Catherine Lynch with the Atlantic Council of Mardy Associates, I was struck by the difference of your level of investments in the United States versus Europe.

Um, and I wondered if you could explain a bit what you find lacking in Europe in terms of investment and, uh, what you would suggest that Europe do as you know, discussion about this with Botha and dring reports saying how important additional investment would be in Europe?

Audience 3: and dring reports saying how important additional investment would be in Europe?

Audience 4: My name is Constance SCH, I run the central on the US inter bookings institution, um, you presented, uh, the work of your fund as very transparent, admirably so, um, fundamentally apolitical.

But we live in a time, uh, when very wealthy billionaires, Tech billionaires are taking overtly political positions and positions that are anti-democratic and in fact are exhibiting a distinct fness for autocratic political models.

How do you feel about that and what do you think is the responsibility the civic responsibility of people in your position in that context?

Nicolai: Um, Europe, um, so I'm a proud European, okay?

Um, but, um, we see, we see that productivity growth in Europe has been not very strong and for sure, uh, less than what we see in America.

And it is, um, it's really worth reading the Drau report because it lays out in great detail why that is the case.

And it has to do with, um, the industry mix, we have little technology which has been driving growth, we have quite a lot of kind of old Industries, uh, uh, and that's where a lot of the research money is still going in, you know, into the car industry for instance.

Um, there is something with mentality in Europe, um, we take less risks.

You know, if you go bankrupt in Europe, you are, you normally don't get a second chance, here it's part of your learning, right?

Um, so there is a higher willingness for making mistakes and for taking risks and it's something really positive about that.

And then it's just the mentality, right, I mean, hey, I went to business school here, you know, 5% is that a high or a low number?

In Europe, they think it's a high number, in America, it's a really low number, right?

It's just something with how you are, how you anchor your Ambitions.

So there are a lot of things there, I think for the moment now it's what we seeing is, uh, and it's also of course regulation and we have, we meet with cosos, uh, across the various countries, um, there is a lot of Regulation, um, and that's really holding back, uh, you know, R&D establishments, Innovation, uh, and so on.

What would it take to to get it to move, uh, well, Drau claims that it takes, uh, quite a bit of money and it takes takes leadership, right?

Then is it our responsibility to think about, um, extremely wealthy people who, um, like auts, yeah, who like a I don't think that's our task to sort out.

I think that's somebody else who needs to look at that.

Adam: Okay, that was clear.

Audience 5: T form appear Institute, uh, thank you, uh, when I first started studying s wealth funds, one of my colleagues said that, uh, Sovereign wealth Fund in Norway has been a political issue at all times, every election is about the Sovereign wealth fund.

Now you emphasize that the consensus among politicians in in Norway at least at the Pres so has that changed?

Or is the question of what you're doing with the money or how much is spent now rather later which I think Jo's question, um, uh, uh, is that still an issue in, uh, in in Norway?

And you have a problem, I guess, in some sense so much of the budget is paid out of the out of the Sovereign weal fund, is that a is that a problem in terms of the domestic politics?

Audience 6: Joe Peterson insute, uh, actually T that wasn't a my question, but I, I like your question, I, I'm looking forward to the answer, my question is about the is Success raising it its own problems in the sense that, uh, the purpose of the fund is to save resources for the future Generations as you pump the oil out.

But almost no countries in the world have ever done that, uh, most all exporters never said anything inre, you know, in in recent decades, there's been some efforts and a few have have exceeded and are up there with Norway inul and maybe Singapore so wellls but most it would be hard to say not so does this growing inequality sort of sort of Gap between those who a few who have succeeded Beyond anyone's dreams and I think it's quite fair to say that over the years the fund has grown much bigger than projected every 10 years it's bigger than projected, uh, does that success raise tensions or issues either inside Norway or outside in terms of the inequality, uh, that it presents there is a very?

But almost no countries in the world have ever done that, uh, most all exporters never said anything inre, you know, in in recent decades, there's been some efforts and a few have have exceeded and are up there with Norway inul and maybe Singapore so wellls but most it would be hard to say not so does this growing inequality sort of sort of Gap between those who a few who have succeeded Beyond anyone's dreams and I think it's quite fair to say that over the years the fund has grown much bigger than projected every 10 years it's bigger than projected, uh, does that success raise tensions or issues either inside Norway or outside in terms of the inequality, uh, that it presents there is a very?

But almost no countries in the world have ever done that, uh, most all exporters never said anything inre, you know, in in recent decades, there's been some efforts and a few have have exceeded and are up there with Norway inul and maybe Singapore so wellls but most it would be hard to say not so does this growing inequality sort of sort of Gap between those who a few who have succeeded Beyond anyone's dreams and I think it's quite fair to say that over the years the fund has grown much bigger than projected every 10 years it's bigger than projected, uh, does that success raise tensions or issues either inside Norway or outside in terms of the inequality, uh, that it presents there is a very?

But almost no countries in the world have ever done that, uh, most all exporters never said anything inre, you know, in in recent decades, there's been some efforts and a few have have exceeded and are up there with Norway inul and maybe Singapore so wellls but most it would be hard to say not so does this growing inequality sort of sort of Gap between those who a few who have succeeded Beyond anyone's dreams and I think it's quite fair to say that over the years the fund has grown much bigger than projected every 10 years it's bigger than projected, uh, does that success raise tensions or issues either inside Norway or outside in terms of the inequality, uh, that it presents there is a very?

Nicolai: Um, there there is a very, uh, clear, um, split, uh, in terms of the roles we have in no way, right?

So we spend no time on how the money is going to be spent, that's the politicians.

The only thing we care about is to make money and then it goes into the budget next year is projected at 2 and a half% of the fund and it will cover something like 23% of the budget.

Um, does it create increased inequality within the country? No, I mean, U the fund, uh, decrease inequality within the country because it's being used on education, uh, you know, health care and, uh, and so on.

Does it increase, uh, you know, the wealth of Norway relative to other countries? Um, yes, I guess it it does.

But it's interesting what you say that countries generally have not kept large, uh, wealth for a long time.

You're right, there has never been there has never been a successful fund for a very long time, never in the history of the world.

Now how, um, how could this fund disappear?

Well, it could disappear if, uh, if you had a massive draw down in financial markets caused by something which is really bad and so therefore you would not adjust down the spending of the fund so you, um, and at the same time you sack management and close investment positions at the wrong time, then the fund doesn't last for long.

That's the main risk.

Audience 7: Catherine Lynch with Black Rock fixed income, you a more about how you see that 10 basis point allocation to unlisted infrastructure evolving over time?

Nicolai: Yeah, I think it will, um, I think it will go up.

Um, well, we, when we got it into our mandate, um, in 21, I, well, we, we thought that the returns in that part of the market was, they were not very attractive.

It's got of really difficult to remember back to the days, but you know, Green investment that it was so hot, you couldn't get in.

Uh, or all the boards told all the investment managers, you have to increase your green Investments because otherwise we look stupid and we won't get any clients.

Massive, massive pressure to make investments at very low returns, huge competition, he was just really not attractive.

So we made one investment and then we just paused and didn't do much for a long period of time.

Now I think it's very different, right?

Um, much less Focus, I mean, clearly in the states, uh, the The View started to change first, it's coming to Europe to a certain extent.

Uh, there is less competition for, uh, for renewable infrastructure projects and they are more attractive.

They, we, they are, you know, we, we have done a few lately and we think we'll do more.

Audience 8: Mona from Mono Associates to see you question about fixed income, we talked about the equity side of the portfolio, but curious about the role of fixed income in your portfolio.

Uh, in a world where correlations have gotten tighter, is it liability management? Is it duration positioning? How do you think about the role of fixed income in this in the fund?

Audience 9: Thank you, I have a followup question on the gentl and your answer, I would like to know, uh, your views of sovereign we funds investing domestically.

We see other than some countries at the Middle East and the developing countries now governments wanting to establish such funds what do you think benefits RIS?

Nicolai: Thank you, well, I, I think I'm me whether, uh, wealth funds should spend money domestically or abroad, I think that totally depends on the function of the fund and why it was established, right?

You could make a good argument for both, but for us, it was to keep, uh, to keep the money outside the country, so very clear, uh, very clear part of the structure.

Fixed income is there to balance returns.

Um, and we also have a very good rebalancing rule so that when, um, when equities go up a lot and come, uh, and go, uh, you know, above where they should be, we rebalance and and vice versa.

So, uh, when stocks are high, we sell them and put more into bonds and the other way around.

So it's a rebalancing rule which again has been made by the Minister of Finance and which works really well.

Adam: Um, okay, so that dealt with the second question, okay, and the first question, yeah, all right.

Audience 10: Wilson Center, when you were talking about risk, uh, we're running enormous deficits here in the country where you have a half your Investments and they don't look like they're going down anytime soon.

At at some point, is there a risk of a bond holder rolt or anything like that that would affect overall your invests here in the US?

Audience 11: Yeah, thank you, um, I have two closely related inter you get one.

Adam: Mark, no, you get one question, not two, all right, I'll phrase it down to one then you'll get cut off if you cheat.

Audience 11: So you have $2 trillion for a country of five million people, it's a self- sustaining Fund in perpetuity.

Um, and, um, you transfer 3% of GDP as you said to the budget every year, but why do you need a fund that, um, exists into eternity?

And why not provide for example, tax cuts or something like that more money to benefit citizens in nor way currently?

Nicolai: Thank you, that was a good one question, well, uh, tax, taxes that I mean, that's a political decision that politicians have to answer for.

Um, yeah, I haven't got a view on on taxes.

Um, is there a a debt scenario, public debt scenario in the US that would cause you to rethink your overweight allocation?

You know, I think it's a, it's a, it's a very, very good question of course and the budget deficit situation is, uh, is in a way front of front of mind.

Uh, it's a very and I'm asking a lot of of the the biggest brains in this country to try to figure out what they think and where is the where is the pain point and where do you start to get start to get worried and at which level will investors certainly start to demand a much higher rate to, uh, to buy government debt.

I, I don't think I have a good answer, but it's certainly something, uh, we watch.

Of course, the we hear the same from IMF, right, they have been very clear and loud about it and and the World Bank and so on.

So, um, there are many very clever people who are worried about it.

Audience 12: Washington University, um, the environmental shock is clearly a global systemic shock.

At the same time, with besides getic risks, we know recent the have put out most countries have very high government debts as well as priv.

So going forward, are you expecting lower returns given the situation?

Nicolai: Yeah, I do expect lower returns going forward.

Um, because, um, we've had a very long period of falling interest rates from high levels down to zero and now they back up a bit, but you know, um, not huge.

We do see underlying inflationary, uh, forces, we mentioned in the food market for instance.

Um, valuations in a stock markets are higher, so I think we should expect, uh, returns to be lower going forward.

I think it's going to be difficult to make a lot of money.

So I think the ements, um, need to be very careful with their exp they need to be, uh, focused in on exportation management.

Adam: That's no fun, um, it's probably right, but it's no fun.

Audience 13: Uh, Ashraf H from Ravenswood Partners, uh, one of the big, uh, Trends in the US has been the passive versus active, uh, Trend and you used to run an active fund now you're you know 2% owner of all world's asset where is your view of where this all shakes out, uh, at least in US markets?

Audience 13: Uh, Ashraf H from Ravenswood Partners, uh, one of the big, uh, Trends in the US has been the passive versus active, uh, Trend and you used to run an active fund now you're you know 2% owner of all world's asset where is your view of where this all shakes out, uh, at least in US markets?

Nicolai: Well, I think it's very interesting the passive versus, uh, active debate.

Um, we, we, what we do is that we run the capital, uh, close to the index and so we have index weights from the ministry and then we have a risk budget which tells us how far from the index week can be.

Um, there's clearly, um, more and more money going into passive and, um, but the problem is somebody somebody needs to be active because you need to establish prices in the market and somebody needs to be responsible and vote, uh, and so on.

So I suspect that the development will continue in the direction of passive, uh, and we will continue to do a combination of both.

Adam: Great, one of the great things about I believe you already had a question one of the great things about doing an event with a Norwegian a financial Visionary someone who has a reporting relationship inside a central bank, all these aspects along with Nikolai's obvious personal talents mean you do get Frank answers, clear answers, brief answers.

It's a real learning experience for me and I believe everyone in the audience.

Uh, thank you for including this form of transparency in your Wast visit and thanks to the Ambassador and the Norwegian Embassy, the Royal Norwegian Embassy.

We at the Peterson Institute in the spirit of transparency do have some support from Norges Bank investment management and are proud and have learned a lot from the relationship and we hope we'll continue to enable learning in both directions.

Thank you all very much, thank you.