Alexandra Heal of the Financial Times reports Canadian pension giant turns to Blackstone and KKR to seal infrastructure megadeals:

One of the world’s biggest infrastructure investors is turning to private capital groups to help it land megadeals, as firms such as KKR & Co. Inc., Blackstone Inc. and BlackRock Inc. expand their influence in a sector long dominated by pension funds.

Canada Pension Plan Investment Board has built almost US$80 billion in exposure to energy and infrastructure by investing directly in companies. But in the past year it has started backing some of the biggest managers’ funds, it told the FT.

“Infrastructure deals are becoming increasingly large,” said James Bryce, head of infrastructure at CPPIB. “As an investor with [a fund], are we able to open up for both of us deal opportunities that we may not have been able to chase on our own?”

CPPIB’s shift demonstrates the extent of the infrastructure market’s transformation from a backwater where deals were cut by pension plans to one of the most important strategies of the largest private capital groups.

It also underlines the growing size of infrastructure deals coming to market, as artificial intelligence and energy security become two of the world’s most popular investment themes.

Infrastructure megadeals this year include two involving BlackRock’s Global Infrastructure Partners, the acquisition of Aligned Data Centres and power group AES for US$40 billion and US$33 billion respectively.

Last year marked a record for infrastructure fundraising by firms who manage cash for institutional clients, with US$200 billion raised, according to McKinsey & Co.

“Twenty years ago, there was no $20 billion infrastructure fund,” said John Graham, chief executive of CPPIB. “If you wanted to deploy a billion dollars into this space you would have been 80 per cent of the fund… It was probably somewhere in the past five years where there was an inflection.”

GIP, which BlackRock bought two years ago, now manages US$170 billion in assets and recently raised a US$25 billion fund. KKR’s latest infrastructure fund just raised US$19 billion, and Blackstone’s open-ended vehicle now manages around US$75 billion.

Bryce said CPPIB’s infrastructure arm would still mostly invest directly in companies, but backing some funds would allow it to work with those managers to source and underwrite large deals together.

Over the past year, CPPIB has committed 500 million euros to EQT’s 22-billion-euro flagship infrastructure fund and US$750 million to KKR’s equivalent, as well as pledging to invest in Blackstone’s open-ended funds. 

This is an interesting article because CPP Investments CEO John Graham is right:

 “Twenty years ago, there was no $20 billion infrastructure fund. If you wanted to deploy a billion dollars into this space you would have been 80 per cent of the fund… It was probably somewhere in the past five years where there was an inflection.”

When I met former CEO Mark Wiseman back in 2011 (or around that time), he told me their strategy in private equity would always be to partner up with the best funds on large co-investments, and go more direct in infrastructure and real estate.

Times have changed a lot since then. What exactly happened five years ago?

Well, the pandemic happened, and it changed everything for large private equity boutiques that were more focused on private equity and real estate.

All of a sudden, their focus shifted increasingly to private credit and infrastructure, where they can massively scale into projects.

That was a game changer. Even BlackRock wanted a piece of the action and acquired GIP two years ago. 

All of a sudden, the Maple 8 Funds were no longer the only infrastructure players in town, they had massive competition.

And just like in private equity, you're not going to beat the Blackstones and KKRs of this world, much wiser to partner up with them on infrastructure megadeals when it makes perfect sense.

The good thing about infrastructure is it's a relatively stable asset class where you can deploy mega billions and since it's heavily regulated, you can manage risks appropriately and embed inflation protection in your long-dated contracts. 

I don't want to make it sound like there are no risks in infrastructure -- there definitely are; look at what a fiasco Thames Water turned out to be --  but in general it's a boring asset class with extremely long duration and that appeals to pension funds.

Of course, things are changing fast there too. There's more competition; pension funds are buying and selling assets more frequently and there are more risks than meets the eye (I will get into this with an expert in another post).

Will CPP Investments continue to buy companies directly in infrastructure? 

Sure it will. James Bryce, their Head of Infrastructure (featured above), sees all sorts of deals and when it makes sense, they will acquire companies on their own.

But the really big megadeals will continue well into the future, so expect them to partner up with KKR, Blackstone, BlackRock, EQt and others when it makes sense and those deals will figure more prominently in the future.

Interestingly, if you look at BCI's Infrastructure approach, they partner up with two or three large infrastructure investors (like Macquarie and Brookfield) and co-invest with them on large deals.

This is the right approach; this is the right strategy going forward. 

What will happen is the big funds will become larger and the medium to small funds will really need to differentiate themselves if they want to survive.

All this to say, even in boring infrastructure, the landscape is changing fast because competition for megadeals is ferocious.

Below,The AI boom is colliding with the limits of the physical world, creating opportunities well beyond chips and data centers, according to Parnassus Investments CIO Todd Ahlsten. He joins Bloomberg to discuss why the historic surge in AI infrastructure spending is entering a riskier phase, where he sees longer-term opportunities, and why traditional software companies including Salesforce, Workday and ServiceNow could face pressure as AI changes the economics of seat-based software. He joins Ed Ludlow on "Bloomberg Tech."

Also, dive into KKR’s Real Assets business. In this episode of “Dining In at KKR” KKR’s Head of Real Assets, Raj Agrawal, sits down with James Foye, a Principal on the Infrastructure team, to discuss how KKR turned a global financial crisis into opportunity, launching KKR’s Infrastructure business.

KKR created its Infrastructure business in 2008, amid tremendous volatility following the Global Finance Crisis, when existing managers struggled to protect capital. The firm’s decision to enter the space with a distinct risk-return strategy, which allows for capital preservation, reflects its bias for action that is built on a culture of empowering a team of leaders.

Today, KKR manages more than $100 billion in its infrastructure business and has successfully tested its investment thesis that private infrastructure is able to provide downside protection during periods of volatility – such as the COVID supply-chain disruptions in 2020. The team still operates with that entrepreneurship, business-owner mentality it had back in 2008.

Layan Odeh of Bloomberg reports Healthcare of Ontario Pension Plan's PE boss departs:

Healthcare of Ontario Pension Plan’s global private equity head Lori Hall-Kimm is leaving to pursue another opportunity.

Mark Cormier and Roman Gula, both managing directors within the private equity group, will succeed Hall-Kimm as acting co- heads on an interim basis and report to Chief Investment Officer Michael Wissell, according to an internal memo seen by Bloomberg.

A representative for HOOPP confirmed the contents of the memo.

Since Hall-Kimm joined HOOPP in 2022, the private equity arm’s net assets climbed to C$24.2 billion ($17.5 billion) from roughly C$20 billion. She previously spent six years at the Canada Pension Plan Investment Board, where she held several roles within its private equity unit, according to her LinkedIn profile.

HOOPP, which had C$132 billion of assets at the end of 2025, serves hospital and community-based healthcare workers in Canada’s most populous province, with more than 504,000 active, deferred and retired members.

Layan Odeh and Paula Sambo of Bloomberg also report CPPIB is said to see several departures across senior ranks: 

Canada Pension Plan Investment Board has seen several departures from its senior ranks over the past few weeks, according to people familiar with the matter.

The affected asset classes included investment risk, credit, real assets and sustainable energies, according to the people, who asked not to be identified due to the sensitivity of the matter, as well as Bloomberg News analysis and LinkedIn posts.

The “circumstances are a mix of voluntary and involuntary departures, all in line with business-as-usual retention rates and usual efficiency decisions due to evolving markets and strategies,” Michel Leduc, the pension manager’s head of public affairs, said in a statement.

The Toronto-based firm, which manages C$863.6 billion ($625 billion) in net assets, had 2,084 employees at the end of its last fiscal year, down from 2,125 from a year earlier.

“We continued to focus on operating discipline,” Chief Executive Officer John Graham said in the annual report. He added that the pension plan managed around C$220 billion more in assets with fewer employees than at the of fiscal 2023.

Just another random Wednesday when you learn of senior departures at Canada's large pension funds.

Undoubtedly, the biggest one is Lori Hall Kimm, Head of Global PE at HOOPP: 

Lori joined HOOPP in 2022 as the Head of Global Private Equity. In her role, Lori leads the Private Equity team and is responsible for the strategic, operational and investment activities for private capital. She also oversees its global portfolio, which ranges across a variety of industries and asset classes. In 2025, Lori was named to the Private Equity International Women of Influence in Private Markets list, which recognizes influential women making their mark in the alternative assets industry.

Prior to joining HOOPP, Lori spent six years with CPP Investments, most recently as Managing Director, Direct Private Equity, where she led the team responsible for the Consumer/Retail sector. Previously, she spent nearly 11 years in the Private Capital team at Ontario Teachers’ Pension Plan, helping establish their London office and leading their European fund and co-investments and also worked in investment banking at Goldman Sachs.

Lori holds a BBA (Honours) from the Schulich School of Business at York University and an MBA from the Columbia Business School. 

I never met or spoke to Lori, don't know her well but she had a stellar reputation and all the right credentials.

So why is she leaving HOOPP? To pursue another opportunity?

Maybe but I'm not going to play coy with you; it's been brutal in private equity over the last few years.

I've seen senior departures in Private Equity at CPP Investments, OTPP, OMERS, BCI and now HOOPP.

Typically, what happens behind the scenes is that differing views on strategy and/ or unsatisfactory returns lead to leaders being replaced with new leaders who are either on board with the new strategy or replaced as well.

But make no mistake, private equity has been brutal both from an absolute return standpoint as well as a relative one as public equities continue to soar into the stratosphere, led by a handful of high-flying tech names. 

Importantly, there is a structural change going on where higher rates, higher input costs, a terrible environment for distributions, are all impacting returns over the last few years.

Private equity used to be a hot asset class, professionals were sought after, nowadays, not so much.

I saw the same thing in real estate after the pandemic. La Caisse fired over half its real estate team as it shifted strategy from being an operator to solely being an investor. A lot of amazing real estate professionals were let go. It was just brutal.

All this to say, restructurings happen often at Canada's large pension funds, it's never fun and a lot of good people are let go.

Yesterday, Limin Yang posted a very nice post on LinkedIn saying he's leaving CPP Investments after 19 years. He's an investment risk leader who has worked across public and private markets as well as sustainable investing.

I reached out to him, told him I'd love a guest post on risk, and put him in touch with some consultants.

The guy is smart, experienced and let me tell you, over the next three years, you're going to need experienced risk professionals like him.

I didn't ask him why he's leaving CPP Investments, he said they restructured his group, he didn't have any hard feelings.

That's the way it should be, once you leave an organization, make sure you sign a fair package and say goodbye, adios, till we meet again, if we ever do.

Where it gets tricky is if you're fired without cause, for dubious reasons. Then my advice is to get a great lawyer, and don't stop until you receive more than a fair package because once you're let go from these shops, good luck landing an equally great job (most never do). 

So why is CPP Investments letting go of senior people across divisions?  

Simple: they are in cost-cutting mode because too many critics feel they are way, WAY overbloated as an organization and there's lots of fat to cut.

I personally think the board of directors put pressure on John Graham, and he relayed the message to his senior team.  

Nobody will ever admit this to me publicly or privately but I've seen so many restructurings at these shops, I know exactly how it works behind the scenes.

It's not fun, it's part of the ecosystem of these large organizations, and that's another reason why they pay above average, because this is rarely a job for life and when senior people get let go, it's not easy for them to bounce back and find an equally high-paying job.

Alright, enough on restructurings, brings back bad memories for me.

Below, private equity has long promised investors better returns than public markets, while offering entrepreneurs like Dan Namerow life-changing exits. But the market that made those deals work has changed. Higher interest rates have made debt-financed buyouts harder to justify, while deals struck at peak valuations in 2020 and 2021 have become more difficult to exit. 

University of Chicago Booth professor Steven Kaplan says US buyout funds largely beat public markets for decades, but that pattern has reversed since 2019, while PitchBook reports that the backlog of companies held by private equity firms has risen to more than 33,000. The result is a tougher environment where firms are being judged less on leverage and multiple expansion, and more on whether they can actually improve the businesses they buy.

Last week, IMCO CEO Bert Clark wrote a comment on LinkedIn on why it's time to look beyond some common measures of investment performance:

Many Canadian pension funds report annually on their net value add (NVA) — the extent to which their returns exceed chosen benchmarks, net of management fees and operating expenses. Sector observers sometimes treat this figure as a proxy for overall investment performance.

In recent years, many pensions have had to explain their negative NVA, particularly those with private assets that have tended to underperform public markets. In doing so, some pointed instead to their smoother long-term investment results as better indicators of overall investment performance.

But both NVA and return volatility are imperfect measures of investment success. NVA is hard to measure, typically quite small, and does not directly reflect pension objectives. And volatility does not reliably capture the risks that can impair long-term returns.

It may be time to assess pension performance through a simpler set of questions: Are target returns being met? Does the portfolio contain large risks? Are operations cost effective?

Overall return objectives as opposed to NVA

NVA can be useful when a strategy closely tracks its benchmark, such as with actively managed public equity mutual funds and their relevant indexes. It is less useful when the strategy differs materially from the benchmark, as is often the case with the private market strategies that represent a significant proportion of many pension portfolios.

NVA is also typically very small relative to total pension fund returns. CEM Benchmarking has reported that the 10-year average NVA across its pension fund database was just 18 basis points. The vast majority of overall returns are driven by investment decisions that have nothing to do with NVA, such as asset mix, asset class strategies, leverage, and currency exposure.

Most importantly, NVA says little about whether pensions are meeting the return objectives that flow from their liabilities. Rolling asset-class NVAs up into a total portfolio measure only shows performance relative to a mix of benchmarks. If the objective is to achieve a defined long-term return target, that target should be the primary measure of success.

Common secondary performance measures, such as comparisons with broad equity market indexes should, like NVA, also be approached with caution. Many indexes are too concentrated today to serve as realistic overall portfolio alternatives: US companies represent 63% of the MSCIACWI market cap; and the 10 largest US companies represent over 37% of the MSCI US index. And while peer fund comparisons can provide context for pension results, they should also be interpreted with care. Pension funds differ in term of their liabilities, inflows / outflows, risk tolerances, and investment strategies.

The best measure of investment performance for a pension is its own target return. Measures such as NVA, peer results, and broad market indexes can provide useful context, but none should be treated as a proxy for overall investment success.

Concentrations of risk as opposed to volatility

Pensions often prefer smoother year-over-year results, especially when they have net outflows. But return volatility is not a good proxy for the risks in a portfolio that can lead to weak long-term returns. Return smoothness may simply reflect exposure to private assets whose valuations adjust more gradually.

A better approach to assessing portfolio risk is to scan portfolios for the things that can create long-term problems like excessive leverage, large exposures to a single investment, manager, market segment, asset class, geography or currency, or inadequate safe harbours. This provides more insight into whether a portfolio has been well-constructed to achieve their target returns without taking excessive risk in any area.

Costs matter

Costs are a key input in any business, yet they are often overlooked in the investment industry. Returns are sometimes quoted before costs, high manager fees are common, and expensive operations are often tolerated. Pension costs deserve scrutiny because they directly reduce returns, are controllable in a way that markets definitely are not, often impact returns more than NVA, and reflect basic organizational discipline.

By themselves, common performance measures such as NVA and return volatility are imperfect gauges of overall pension performance. A more useful framework would focus on whether pensions are meeting their return objectives, avoiding large risks, and controlling costs. Things like NVA, peer results and return volatility can serve as context, but none is an adequate measure of success on its own. 

Excellent comment by IMCO's CEO Bert Clark explaining the pitfalls of net value add (NVA) and return volatility and why "a more useful framework would focus on whether pensions are meeting their return objectives, avoiding large risks, and controlling costs."

One of the questions I get a lot is why we are paying senior executives at large Canadian pension funds millions in compensation if they cannot beat their respective benchmarks?

It's a fair question but it fails to address the risk side of the equation. 

In an earlier comment, The Case for Avoiding Unnecessary Complexity,  Bert Clark delved into why there are periods where concentration risk is high in an index and trying to beat it would entail taking unacceptable risk at a pension fund:

Big bets can also undermine the strategy of owning growth assets. Individual companies and market segments regularly reach excessively high valuations, then suffer steep drops in value with prolonged or no recovery. Japanese equities peaked in 1989, Nortel peaked in 2000, Russian equities peaked in May 2008, BlackBerry/Research In Motion peaked around 2008, U.S. technology stocks peaked in 2000, and North American REITs peaked in 2021. They all then fell in value. Some recovered over a very long time. Some are still recovering. Some will never recover.

A large allocation to any one of these companies or market segments would have materially detracted from an investor’s long-term portfolio returns. Avoiding the exuberance that can build around individual companies and market segments takes discipline. This is why IMCO explicitly avoids outsized allocations to any single asset class, sector, investment or theme.

 He even states the following: 

While the S&P 500 has been an effective way to gain diversified growth exposure over the last century, today investors with scale can build better diversified growth portfolios with exposure to both public and private assets, a balance of geographies and market segments (small-cap, large-cap, and different industries). At IMCO this is the approach we take.    

Now, I want to make it clear: there is nothing wrong with adhering to a mostly passive strategy over the long run. This is what Norway's massive sovereign wealth fund has done since its inception, participating in the bubbles when stocks surge and feeling the pain when a bear market strikes.

It does this is a very cost-effective way and many critics of the Maple 8 approach think our large pension funds should adopt the same passive model as Norway's Fund.

But as I keep stating, the objective function of a sovereign wealth fund isn't the same as that of a pension. The former wants to maximize returns over the long run while the latter wants to maximize returns without undue risk of loss. It's a subtle but important difference.

A pension fund starts with known liabilities over the next 75+ years and wants to make sure it has enough assets to cover those liabilities without placing the plan in a situation where a severe deficit occurs and members have to pay to make up the difference (which can happen).

So, when Bert Clark asks, "are target (actuarial) returns being met?", he knows that is ultimately what counts the most over the long run for any pension plan.

Now, I know there are critics who will tell me: "Leo, I get all that but when these pension funds are underperforming their own passive benchmarks over a three, four, and five-year period, there's a real problem with their strategy." 

My answer is maybe there is, maybe there isn't; we need to measure a strategy over a longer period of time but I am also open-minded and see the structural changes impacting private markets large Canadian pension funds invest in. 

And if there is a structural, long-term change impacting these markets, Canada's large pension funds will need to respond and figure it out.

That much I'm willing to admit and anyone who disagrees with me needs to really make their case.

Alright, let me wrap it up there but before I forget, IMCO announced a $300-million commitment to KingSett Real Estate Growth LP No. 9 (“KingSett LP9”), the ninth vintage of KingSett Capital’s Growth Fund strategy:

KingSett LP9 invests selectively across Canadian real estate sectors, including industrial, multi-residential, office and retail, with a focus on the Greater Toronto Area, Vancouver and Montreal. KingSett Capital (“KingSett”), a longstanding IMCO strategic partner, will seek to create value through leasing execution, operational improvements, structured capital solutions and asset-level repositioning. For IMCO clients, the investment provides targeted exposure to high-quality Canadian real estate assets that align with IMCO’s Real Estate strategy, supporting stable income and long-term value creation.

“Canada is a strategically important market for IMCO,” said Richard Varkey, Managing Director and Head of Real Estate at IMCO. “Through KingSett LP9, we gain access across the Canadian real estate market where we see attractive fundamentals, supported by KingSett’s skilled team and strong execution capabilities, as well as deep local insights. This investment supports our objective to deliver resilient performance in line with our clients’ long-term objectives.”

“We are pleased IMCO continues to be a core investor for KingSett, and that we are able to further expand our relationship through LP9,” said Rob Kumer, CEO, KingSett Capital. “IMCO’s collaborative and thoughtful approach reinforces our valued partnership as we pursue real estate investment opportunities across Canada.”

More broadly, IMCO invests approximately one-third of its assets under management in Canada across public and private markets, reflecting its commitment to supporting long-term client outcomes while contributing to the Canadian economy.

Good move, the folks at KingSett understand the Canadian real estate market better than most investors and it's good to leverage off their expertise. 

Below, Ed Yardeni, Yardeni Research president, joins 'Squawk Box' to discuss the latest market trends, bond yields, state of the economy, and more.

Also, Adam Parker, Trivariate founder and CEO and CNBC contributor, joins 'Closing Bell' to discuss the 30-year treasury yield topping 5.33 percent.

Chris Tolomia of Quartz reports Norway sovereign wealth fund posts record $184B profit, discloses SpaceX stake:

Norway's Government Pension Fund Global posted a first-half profit of more than 1.75 trillion Norwegian kroner, or roughly $184.9 billion, a record for a six-month period, as equity markets — particularly in Asia — surged in the second quarter. The fund also disclosed a stake in SpaceX, according to CNBC. 

The fund returned 9.4% in the first half, outperforming its benchmark index by 0.22 percentage points. Its total value stood at 22,683 billion kroner, or around $2.34 trillion, at the end of June. Equities, which make up 72.1% of the portfolio, returned 13% over the period, with the technology sector — up 25.3% — and telecommunications sector — up 42.9% — contributing the most. Consumer discretionary was the weakest sector, falling 4%.

"The result is driven by good returns in the equity market, particularly from Asian technology stocks," Norges Bank Investment Management CEO Nicolai Tangen said in a statement on Wednesday. Asia and Oceania equity holdings returned 31.3% in the first half, the strongest of any regional grouping. At a press conference, Tangen highlighted semiconductor stocks as a key driver of returns, according to CNBC.

Norges Bank Investment Management, which manages the fund on behalf of Norway's Ministry of Finance, also revealed that it holds a 0.05% interest in SpaceX, a position worth slightly more than $1.2 billion. Among its largest individual positions, the fund holds a 1.3% interest in Nvidia, valued at $61.8 billion, and a 1.2% interest in Apple, valued at $52.7 billion as of June 30. Its portfolio spans more than 7,000 companies in over 50 countries, giving it ownership of roughly 1.5% of all publicly listed equities worldwide. 

With the SpaceX position added, the fund now has meaningful exposure to both publicly traded companies under Elon Musk's leadership. The fund's Tesla position, which amounts to a 1% ownership interest, was reported to be valued at approximately $15.7 billion by the close of June. The fund rejected Musk's pay arrangements at Tesla on two occasions — opposing his $56 billion package in 2024 and then his trillion-dollar award when it came before shareholders again at the company's late-2025 annual meeting. When reporters at Wednesday's press conference pressed Deputy CEO Trond Grande on how the fund's SpaceX exposure had changed over time, he declined to discuss specific holdings.

The fund's equity investments fell 2.6% in the first quarter as markets faced volatility, before rebounding 15.98% in the second quarter. Fixed-income investments, which make up 25.8% of the portfolio, returned 0.9% in the first half. The fund received 94 billion kroner in capital inflows during the period, though a stronger Norwegian krone reduced the fund's krone-denominated value by 427 billion kroner. 

Last week, I covered the mid-year and quarterly performance of some major Canadian pension funds:

• OTPP earned 9.5% in the first half of the year, driven by its major investment in SpaceX 
• OMERS returned 4.8% in the first half of the year 
• La Caisse gained 5.1% in the first half of the year 
• And CPP Investments delivered 7.5% in its fiscal Q1

I wanted to begin this week by covering Norway's GPFG, which is a great proxy for 70% Global Equities/ 25% Global Bonds (the Fund also has 5% in unlisted global real estate).

Not surprisingly, the Fund snapped back strongly in Q2, posting a 9.4% gain in the first half.

Tech stocks led the charge in Q2, boosting the Fund's return in the first half. 

As far as its stake in SpaceX, it's peanuts relative to the biggest investors there:

The curtain is finally lifting on who owns SpaceX (SPCX), and the stock is surging over 5% Monday.

More than 1,500 investors disclosed stakes, but only 23 account for over 80% of the reported shares.

Bloomberg, Yahoo Finance

The concentration is even more striking at the other end. Nearly 1,340 investors reported positions of fewer than 100,000 shares, yet together they own less than 1% of the shares in the filings.

Those disclosures offer the first broad look at SpaceX ownership since the company went public on June 12. Large investment managers are required to report their US stock holdings every quarter, and the latest batch includes some familiar names with enormous positions.

Alphabet (GOOGL, GOOG) leads the pack with more than 551 million shares, while Fidelity reported more than 302 million. Gigafund, Saudi Arabia's Public Investment Fund, and Nvidia (NVDA) each disclosed more than 100 million.

Holder

Shares owned (millions)

Value Friday

Alphabet

551.2

$77.2B

Fidelity

302.6

$42.4B

Gigafund

171.8

$24.1B

Saudi Public Investment Fund

154.1

$21.6B

Nvidia

122.8

$17.2B

Harvard Management Co.

12.9

$1.8B

Fidelity's number reflects stock held across its managed funds and accounts rather than one giant corporate wager. But the breadth of the list is striking anyway, spanning Big Tech, venture capital, sovereign wealth, traditional asset management, and even the Ivy League.

Harvard may be the biggest surprise. Its nearly 13 million SpaceX shares make the company the largest individual stock position in Harvard Management Co.'s publicly disclosed US equity portfolio. 

You can view the full list of institutional investors in SpaceX here.

The stock has recently popped nicely after reaching a low of $104 the day after its first earnings, but remains below the high of $225 and only $10 above its IPO price:

You have a lot of big funds in here, so expect significant volatility going forward. 

Getting back to Norway's GPFG, Nik Martin of DW reports the Fund is warning of an AI-driven stock market bubble:

As if the vast scale of artificial intelligence (AI) investments wasn't scary enough, the head of the world's largest sovereign wealth fund is also sounding the alarm.

Nicolai Tangen, CEO of Norway's Government Pension Fund Global (GPFG), warned last week that, in an extreme market collapse, a massive loss to its $2.4 trillion (€2.07 trillion) portfolio is "not completely improbable."

The fund, created to invest the Nordic country's vast oil and gas revenues, delivered a record profit of 1,753 billion Norwegian kroner ($186 billion/€161 billion) in the first six months of the year.

Yet, Tangen warned that the AI-chip trade — whose lofty valuations helped drive those gains — now poses a serious risk. A sharp correction, he warned, could potentially erase much of the massive wealth built up over the past 30 years.

During what Tangen called an "abnormal" period of low taxes, low inflation and low interest rates, the investments now finance roughly a quarter of the Norwegian government's budget.

Why fund managers remain invested despite AI concerns

While Tangen might sound overly alarmist, Bill Megginson, a leading researcher on sovereign wealth funds, believes many established fund managers share his cautious stance on stock valuations, but are "staying the course, queasily."

"Few managers are inclined to take profits when such a fundamental technology buildout, fueled by literally unprecedented levels of capital spending, shows little evidence of brittleness," Megginson, a finance professor at the University of Oklahoma, told DW.

Major technology companies are expected to invest more than $1 trillion in AI-related infrastructure like chips, data centers and power infrastructure in the race to match or beat human intelligence.

China, meanwhile, is developing capable AI models at a fraction of the cost of their rivals in the United States.

The Bank for International Settlements warned in June that AI "exuberance" risks ending in a bust if returns fall short of expectations.

Why Norway's wealth fund cannot easily hedge risk

Unlike Saudi Arabia or Singapore's sovereign wealth funds, which make large investments in private equity, infrastructure and real estate, Norway largely follows a benchmark-based investment strategy by buying index funds that track major global markets.

Technology accounts for roughly a third of the fund's stock investments.

"The oil fund follows a very passive, broadly diversified global index strategy," Karin Thorburn, research chair in finance at the Norwegian School of Economics, told DW.

Although this approach "eliminates a lot of the uncertainty of picking individual stocks," Thorburn said Norway's GPFG fund managers have "almost no room to deviate from the index or actively hedge."

A strict government mandate means the Norwegian fund cannot take significant protective positions, including holding large amounts of cash. 

Most institutional investors, on the other hand, hedge by buying options or futures, which rise in value when regular investments like stocks drop, offsetting some of the declines.

Thorburn, who served on a 2022 Norwegian government panel probing the growing geopolitical risks to the fund, said portfolio managers trust in the collective knowledge of the financial markets.

"If you were to start betting against the markets, you could be right 50% of the time, but also wrong 50% of the time," she said. "So wisely, the government has decided that we don't do that."

How vulnerable is Norway's fund to an AI-driven sell-off?

Javier Capape, a Madrid-based sovereign wealth fund specialist, thinks Norway is "unusually exposed" through its investment strategy of roughly 70% equities and 30% bonds.

"I would not describe Norway as literally 'unhedged,'" Capape said, noting that Norges Bank Investment Management, a unit at the central bank that manages the country's sovereign wealth fund, also uses currency, interest-rate and equity derivatives to protect against a crash.

Norway's strategy also contrasts sharply with that of Berkshire Hathaway, until last year run by one of the world's most successful investors, Warren Buffett.

Berkshire is currently sitting on around $365 billion in cash and short-term Treasuries.

Norway's fund does, however, benefit from continuous inflows of oil and gas revenues from its North Sea fields. In 2026, this is projected to be the equivalent of €63 billion. 

Norway's giant fund is a sovereign wealth fund, the biggest in the world, and it has a different objective function than Canada's large pension funds, which look at their liabilities first to determine the right asset mix over the long run.

Because Norway's GPFG invests heavily in global equities, and those indexes are heavily concentrated in technology stocks, its returns are far more volatile.

But over the last three years, there's no doubt Norway's giant fund has benefited from the "AI bubble" and posted some incredible returns. 

The problems will come when a bear market hits US stocks and the giant beta boost becomes a giant beta drag.

Norway's Fund is already warning that a negative scenario will hit its massive portfolio; it will hit all funds, including Canada's Maple 8 funds, but less so because their asset mix is more diversified between private and public markets.

Let me wrap it up there.

Below, NBIM CEO Nicolai Tangen discusses the company’s half-year results, its investment outlook and the impact of macroeconomic headwinds. Great insights here, take the time to listen to him.