(Bloomberg) — Nikolai Tangen, head of Norway’s $1.3 trillion sovereign wealth fund, wants traders to bet against the market.

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The world’s largest single owner of publicly traded companies, with nearly 1.3% of all listed shares, on Thursday outlined a three-year plan to limit losses that have accumulated in turbulent markets for 2022, exacerbated by soaring inflation and rising interest rates. and war in Europe. For the first time in its history, the wealth fund is looking forward to a future in which investments are a fraction of what they used to see.

This means that “excessive returns are more important than ever,” said Tangen, who has repeatedly told his countrymen to prepare for “extremely low returns.”

Speaking in an interview Thursday, Tangen said the key to beating the benchmark would be to “push the fund to become more long-term, more ambivalent, and more active in terms of passive selection.” That is, “there are a lot of things we don’t want to own,” he said, without elaborating.

Built from the wealth of the North Sea in oil and gas, the Oslo-based fund has warned of a prolonged downturn in the markets after posting an average return of 6% over a quarter century of its existence. It lost 4.4% in the third quarter, which is equivalent to about $43 billion.

The fund has only one owner, unlike other large asset managers, is largely affiliated with the index, and invests according to a strict mandate from the Ministry of Finance. She strives to make the most of her limited field to try and beat the standard against which she is measured, something she has been able to achieve in eight of the past ten years.

“In a volatile world, you need to be more long-term and more ambivalent,” Tangen said. This is “because there will be more opportunities when you can do the opposite with everyone else.”

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He said the strategy was “playing into heightened geopolitical uncertainty” and a partial reversal of globalization, while the wealth fund released its three-year strategy. The plan sets goals such as investing in companies before they go public, voting more actively at shareholder meetings, improving cooperation between traders and portfolio managers, and exploiting periods of turmoil in real estate markets.

The fund also needs to be “more robust operationally,” Tangen said, including being prepared to counter cyberattacks. He has already said that openness and transparency are priorities to ensure that Norwegians understand why their rain fund is not growing as quickly as before.

The fund scaled back its participation in initial public offerings last year. In hindsight, he dodged a bullet, Tangen said, having bought fewer IPOs in “really frothy” markets and seeing those IPOs perform “really badly.” But that is likely to change as conditions improve.

“Selectively exploring this opportunity in the next strategy period is something we will look at,” said Equity CEO Pedro Furtado Reis. “Doing this allows us to get into the life cycle of the company earlier and hopefully as the company grows it will have a greater share of that value.”

The fund said it would consider investments in renewable energy storage and transmission in the future, which would expand the range of renewable infrastructure it would like to keep. It spent about 1.4 billion euros ($1.5 billion) on a 50% stake in a Dutch offshore wind farm in 2021, but has not added anything else to its renewable energy infrastructure portfolio.

“It’s competitive,” Tangen said of the wind and solar projects market. “There aren’t a lot of projects out there, they’re very competitive and the returns are very low. So we just want to increase the space. Generally in the investment world, the more options you have, the better.”

The broader scope in renewables also reflects an internal effort within the fund to improve collaboration between teams and identify new investment opportunities, said Daniel Baltazar, chief equity officer.

“We may have built a few more silos than we should have,” Balthazar said. “With the advent of Nikolai, there is a much greater effort to collaborate between teams. With this collaboration between teams, we can also search in a better way across value chains.”

(Updates in detail in sixth paragraph, comments with CEO in twelfth)

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