Tangen: Mega-funds must track indices because governance cannot survive big relative losses
Nicolai Tangen · Nicolai Tangen – Overseeing the Largest Sovereign Wealth Fund (EP.354) · Dec 4, 2023 · at 25:15
Nicolai Tangen, CEO of Norges Bank Investment Management (NBIM), explains why Norway's $1.3 trillion sovereign wealth fund strictly limits tracking error against benchmark indices.
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“The problem is that you are being kicked out at the worst possible time, and typically then you would liquidate the positions and crystallize losses which shouldn't be crystallized. And that is why it's important to be close to index, because a governance structure cannot survive if the leadership of the fund takes too big risks.”
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