The fund that could seed the next economy

The world's largest sovereign wealth fund has the power to truly shift innovation and resilience in Europe - so why don't we? This year, the national sovereign wealth fund, or the oil fund as we call it in local tongue, is meeting heavy criticism over unethical and unsustainable investments, and this is the reflections on how the fund could be the owner of a totally different story.

My small country, with its 5.5 million inhabitants, sits on the world's largest sovereign wealth fund, with over €2 trillion under management. The management principle is simple: transform finite oil revenues into permanent financial capital for the benefit of future generations. And that part is working. The Government Pension Fund Global is managed by Norges Bank Investment Management (NBIM) and has been regarded as a model of intergenerational stewardship. With a market value exceeding NOK 22 trillion (over $2.4 trillion USD), it provides our country with a financial backbone for welfare, economic stability, and long-term savings. The fund's domestic use is strictly managed by a fiscal rule, allowing the government to spend only the fund's expected real rate of return (currently capped at 3%) annually. Abroad, the fund is invested in international stocks, bonds, and real estate. By law, the fund cannot buy assets inside Norway.

Oil money and money money

While the fund will continue to feed the Norwegian economy, new research concludes that further oil and gas exploration will have only a modest effect on Norwegian welfare in the decades ahead. Additional exploration would likely yield around 1% more welfare spending compared to a no-exploration scenario, averaged across each year up to 2050.

In practice, that means the welfare level achievable in 2049 with exploration is a level Norway could reach in 2050 without it. The key reason: oil and gas revenues flow into the Government Pension Fund, not directly into the state budget. The fund is already very large and will continue to grow regardless of new exploration, with returns on existing investments making up an ever-larger share.

But thanks to the fund, GDP and welfare will grow whether or not Norway continues exploring, and other parts of the economy tend to expand more when oil and gas activity is lower. In fact, we have started differentiating between "oil money" and "money money," and we have also slowly started understanding that our investments and focus on oil, in both capital, competence, and industry advantages, are hurting innovation in the rest of our economy. With our current situation related to the Iran war, this problem escalates to become a European issue.

We spent decades channelling our best capital and competence into an industry that, at this point, is buying us one year of welfare.

Key figures (as of Q2 2026)

• €2 trillion – GPFG assets, the world's largest sovereign fund
• 57% – of fund equity held in North American companies
• 20% – share of equity allocation in Europe

With the current investments drawing primarily into existing large industries, not into innovation to fuel the new economy, we are seeing a costly gap. That gap is increasingly also becoming dangerous, not only for Norway, but also for Europe.

Norway's oil wealth is invested with extraordinary discipline. But discipline, applied too uniformly, can become its own form of inaction. Here is what a more strategic choice would look like, and why it matters.

A structural problem building quietly for thirty years

Norway is one of the lowest-ranked countries in Europe on business research intensity, despite having some of the highest per-capita wealth and education levels on the continent. That gap reflects what economists call path dependency: when an economy is so successful at one thing that it becomes structurally unable to pivot to the next thing, even when the signals are clear.

The IEA projects that oil demand will peak before 2030. The Draghi report named Europe's capital and competitiveness gap a tier-one crisis. Europe has a well-documented but inadequately addressed paradox at its core.

European venture funds have outperformed their North American counterparts for fifteen consecutive years. The research output is comparable, and in several fields it leads. The talent is here. And yet the average venture deal in North America is three times the size of a European one, and the US produces five times more unicorns than Europe does.

The gap is not about ideas, but rather about financial backing at scale. Europe lacks patient, large institutional capital willing to anchor early-stage risk. Without that anchor, fund managers cannot justify scaling their own commitments. Talent that cannot find funding at home finds it elsewhere, and stays elsewhere.

A recent article by Harvard researchers Elif Memet with colleagues estimated that a modest reallocation of just 2% of the oil fund (roughly €40 billion) into a dedicated European venture vehicle would be enough to change this dynamic. Not because more money solves everything, but because the signal is worth more than the sum in a world in need of real systems change and rapid transformation. A credible, patient anchor investor changes the risk calculus and investment environment for everyone.

What a different mandate could unlock

NBIM's own CEO, Nicolai Tangen, has for years argued that the fund should be allowed to invest in unlisted equities. He has proposed allocating 3 to 5 percent of the portfolio to this asset class, citing higher long-term returns and access to value creation that currently flows entirely to US and Asian investors. The government has said no, repeatedly, most recently early 2024, due to transparency concerns, fee levels and reputational risk. Seen in light of the current ethical reputational risk the fund runs, this would be minor.

NBIM has expanded its mandate before. Renewable energy infrastructure was added in 2019, and after that a separate real estate strategy followed. The institutional precedent for a new vehicle with strict return benchmarks already exists within the fund's own history.

A realistic pathway could be to start with co-investments alongside established European venture funds. This builds in-house expertise without abandoning fiduciary discipline. Norwegian capital alongside leading European funds changes market psychology before a single direct investment is made.

This should of course be managed in a separately governed venture entity, with mandatory co-investment requirements and transparent return benchmarks.

This way the fund could direct capital toward frontier sectors where Europe can still compete, and that will be crucial for European sovereignty and resilience going forward. Foundational AI is largely captured by US incumbents, but quantum computing, advanced materials, synthetic biology, and climate technology remain open. Norwegian capital could this way secure a seat at the frontier rather than merely a ticket to watch our competitors strengthened.

The real opportunity and last obstacle

A rebalancing of regional allocation would also send a deliberate signal. With its current 57% in North America and 20% in Europe, the fund's portfolio reflects the economy of the past two decades. Shifting this ratio is not just sound financial strategy, it is also geopolitical positioning at a moment when Norway and the EU need each other more than they have in a generation.

Any change to NBIM's mandate requires a parliamentary vote. The arguments against are familiar: fee levels, transparency, valuation risk, the risk of inflating early-stage markets. These are real concerns. They are also precisely how venture capital works: a portfolio of imperfect bets in pursuit of rare, transformative breakthroughs. The goal is not to avoid all risk, but to deploy capital where it generates the most durable value.

Tangen himself has said the global economy cannot run from climate change, and neither can the fund's investments. A strong, innovative, self-sufficient Europe is the best home base for a resilient fund designed to remain relevant for future generations. The fiduciary responsibility of the fund is to protect the fund's value over time, and for the people it was built for. Norway is dependent on a strong and resilient Europe, and a fund mandated to serve future generations is then also responsible for contributing to the companies, the market and the economy to serve these generations on their own continent.

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