The head of the world’s largest fund has warned investors that low returns could become a norm as "permanent" high inflation is set to impact the stock and bond market for years to come.
2022 has been a rough start for the markets as prices dropped across the board. Now Nicolai Tangen believes that the vigorous price rises in the world economy are here to stay, stating that he is “the team leader for team permanent."
The chief executive of the $1.3 trillion Norwegian sovereign wealth fund said in an interview with the Financial Times, that (Inflation) “could be stronger than what is generally expected.”
Mr Tangen added: “We are seeing it across the board, in more and more places. You saw Ikea increasing prices by 9 percent, you have seen food prices going up, continued very high freight rates, trucking rates, metals, commodities, energy, gas we’re seeing signs on wages as well.”
The fund which has 1.4 percent of every single listed equity in the world, returned 14.5 percent for $177 billion, it's second largest return on record in 2021.
The fund has also been on a steady growth tractectory since the global financial crisis in 2008.
But now the chief executive believes that this period of growth is set to end as inflation rears its head.
Mr Tangen said: "How will it pan out? It hits bonds and shares at the same time, for the next few years, it will hit both.”