Norway's wealth fund reports $30 billion loss after Israeli divestments as bond prices slide

Norway's Government Pension Fund Global, the world's largest sovereign wealth fund with roughly $2.3 trillion in assets, reported a third-quarter 2026 loss of approximately $29.7 billion, according to figures cited by Ynetnews. The fund posted a negative investment return of 0.5% on its global portfolio, which the fund attributed primarily to rising interest rates that reduced the market value of its fixed-income holdings. Bonds, which represented 25.8% of the portfolio during the quarter, returned -3.5%, while equities produced a 0.5% gain. The fund underperformed its benchmark by 0.18 percentage points.

Deputy CEO Trond Grande told Reuters that the fund had deliberately kept slightly lower exposure to equities overall and to certain major technology companies, describing these as relatively small deviations from the benchmark set by the Finance Ministry. He said the fund had been modestly underweight some technology stocks for a period and had no immediate plans to change positioning. Technology accounted for about 23% of holdings as of June 30. Grande said the fund was satisfied with its current structure but would continue reviewing decisions, stating that "nothing is carved in stone."

The results were presented alongside the fund's earlier withdrawals from Israeli companies, which began during the Gaza war and expanded in 2025. These included exits from Bezeq and Paz, the sale of holdings in 11 of 61 Israeli companies after the August 2025 Aftenposten disclosure regarding Bet Shemesh Engines, and the divestment of five major Israeli banking groups, valued at approximately 2 billion shekels or $661 million. The fund stated that the Israeli divestments did not cause the third-quarter losses. The Council on Ethics has argued the banks contributed to settlement construction, and the U.S. State Department criticized the Caterpillar exclusion.

Grande also raised concerns about volatility across the AI sector, pointing to companies developing AI models, data centers, electricity suppliers and semiconductor manufacturers. He warned that a backlash against AI or a technical setback in adoption could have significant consequences for equity markets, though he did not characterize this as a systemic threat. Given the fund's size and benchmark-driven mandate, reducing exposure to major technology companies substantially would be difficult without deviating from the market it tracks.