Norway’s sovereign wealth fund
The autumn of 2026 brought a telling episode to the global financial system: the management company of the planet’s largest fund officially recommended reducing the share of government bonds in the fund’s benchmark bond index from 70% to 50%. In a letter to the Norwegian Ministry of Finance, Norges Bank Investment Management justified the proposal by citing the need to achieve higher returns while maintaining sufficient liquidity. At the same time, the share of US Treasury securities should decrease due to an increase in the share of other US bonds, while the currency structure of the index remains largely unchanged. This is a review of the composition of debt investments, which in itself does not indicate a rejection of the dollar.
According to industry observers, the total assets of sovereign wealth funds have exceeded $13 trillion — this is already comparable to the combined GDP of the world’s largest economies and far exceeds the size of most national economies. The Government Pension Fund of Norway (GPFG) remains the largest of them, with assets of around 2.2 trillion dollars, followed by Chinese entities — China Investment Corporation (CIC) and SAFE Investment Company, whose total assets are estimated at between 2.5 and 3.5 trillion dollars — and Abu Dhabi’s investment entities: ADIA, Mubadala and ADQ, whose combined assets exceed 1.6 trillion dollars. The three centers of state capital power embody three different philosophies of influence and three different trajectories for its growth.
Three trillion‑scale models
The Norwegian model is a benchmark for institutional transparency. The fund was established in 1990, funded by oil revenues, and managed by a division of the central bank, relying on benchmark indices and with limited active management capabilities: GPFG owns about 1.5 % of all public shares in the world and invests in shares of about seven thousand companies in more than 50 countries. According to the results for 2025, the fund achieved a return of 15.1%, earning approximately $247 billion; however, in the third quarter of 2026, it recorded a negative return of −0.5%. The main source of the decline was bonds: their return amounted to 3.5% amid rising interest rates, while stocks yielded +0.5%. Another telling factor is that temporary ethical rules were introduced following a parliamentary decision dated November 4, 2025. The Ethics Council continued to monitor investments, but its authority to recommend monitoring companies or removing them from the portfolio was suspended during the review of the rules.
Investments of the Norwegian state fund
“The fund achieved very good results in 2025. The stocks of technology, financial, and mining companies stand out, making a significant contribution to the overall profitability,” said NBIM CEO Nikolay Tangen, summing up the year’s results.
The Abu Dhabi model is the opposite of the Norwegian one: here, state capital operates as a deal‑making machine. Three major investment structures of the emirate (ADIA (established in 1976, with assets of around USD 1 trillion), Mubadala (USD 385 billion as of the end of 2025, with assets growing by 17%), and ADQ (around USD 263 billion before consolidation under the management of L’IMAD)) have carried out hundreds of deals in recent years, focusing on direct investments, infrastructure, and private lending — a segment from which Western banks have retreated. In January 2026, it was announced that ADQ and L’IMAD would merge their assets and investments under the management of L’IMAD. A special focus on artificial intelligence: Mubadala and G42 became the founders of the investment company MGX. It was MGX, together with AI Infrastructure Partnership and BlackRock’s Global Infrastructure Partners, that completed the purchase of Aligned Data Centers in July 2026. The deal valued the company at approximately $40 billion. Mubadala CEO Khaldoun Khalifa Al Mubarak linked the 2025 results to the long‑term investment strategy in key growth sectors in the UAE and abroad.
Tools of influence: from blocking packages to private credit.
The influence of sovereign wealth funds has long gone beyond the mere ownership of securities. First, direct stakes in critical infrastructure (data centers, ports, semiconductors, energy) give the owning states a foothold in foreign economies and a negotiating lever. Second, private lending: Gulf funds have effectively replaced Western banks in financing projects in developing countries, converting capital into political influence. Thirdly, investment diplomacy: deals are announced in conjunction with visits by top officials, and investment commitments become part of bilateral packages, from India to Egypt and France.
Norway illustrates a “soft” form of influence: the fund itself does not bet on any single country, but, owning 1.5 percent of global stocks, it shapes global standards of corporate governance and ESG agendas through voting rules, portfolio exclusions, and public letters to company management. Excluding an issuer from the GPFG portfolio may serve as a signal to other investors. On such a scale, even a predominantly index‑based model gives the fund the opportunity to influence corporate practices.
The UAE Ministry of Finance
Fragmentation and reassessment of the dollar cushion
Funds are increasing their influence amid a profound realignment of global finance itself. The IMF notes: geopolitical shocks consistently increase sovereign risk premia (by an average of 30 basis points for developed countries and 45 for developing countries), with the effect being at least twice as strong for markets with high public debt and weak institutions. Under these conditions, state investors are reviewing portfolio architecture: Norwegians are reviewing the ratio of government to other bonds, the Chinese are reviewing their exposure to American private assets, and Gulf funds, in turn, are balancing between technological partnership with the US and growing cooperation with China.
A separate factor is the discussion about the fate of immobilized sovereign assets. Precedents of reserve freezes shape the logic of accounting for “holding risk” among reserve managers around the world, pushing them to shift capital into gold, neutral jurisdictions, and off‑balance‑sheet instruments. The trend is still not very pronounced, but it maintains a steady direction: each new episode of a forceful resolution of a financial dispute increases the cost of passively holding assets in a foreign jurisdiction.
Abu Dhabi’s public investments
Risks and threats
The state capital system is facing a number of critical challenges. First and foremost, there is concentration risk: as of the end of 2025, the United States accounted for about 53% of all investments in the Norwegian fund. This concentration increases the portfolio’s sensitivity to the American market. The loss in the third quarter of 2026 had another direct cause, namely, a decline in bond prices amid rising interest rates. Second, the politicization of governance: the suspension of the GPFG ethics board’s authority to recommend the exclusion of companies and the growing pressure on funds to “invest at home” undermine the institutional independence on which their profitability has historically relied. Third, lack of transparency: Gulf and Chinese funds disclose significantly less information than NBIM, which makes it difficult to assess the real objectives of the transactions and fuels suspicions about the “hidden motives” behind the expansion. Finally, the main strategic risk is the temptation to turn capital into a weapon: The more frequently assets are frozen, the stronger the incentive for the owning states to use the funds as a tool of pressure, undermining the basic trust on which the entire global financial system is built.
Conclusion and scenarios for the development of the situation
Thus, by autumn 2026, sovereign wealth funds have finally established themselves as independent actors in world politics: their balance sheets are comparable to the GDP of major states, and decisions to reallocate capital are seen as signals of geopolitical bets. Further development depends on whether states can combine investment diversification with market openness. Three trajectories are possible:
1. Quiet diversification (“Rebalancing without the thunder”). Funds continue to gradually shift into alternative assets, including private investments and infrastructure, as well as into markets in countries of the Global South, while maintaining the functionality of the dollar system. The odds are high: the scenario aligns with the observed dynamics, but it merely perpetuates structural imbalances and does not eliminate the risk of a sudden loss of confidence in the key reserve currency.
2. Financial fragmentation (“Parallel balances”). The bloc‑based division of global capital is deepening: the West is tightening investment screening, while Chinese funds and funds from Gulf countries are expanding their own corridors, stretching from the Arabian Peninsula to Southeast Asia and Africa. Sovereign funds are becoming the “glue” of alternative centers of financial power, and recipient countries are becoming the subject of competitive bargaining.
3. The weapon of capital (“Frozen Trillions”). The logic of asset immobilization is developing: freezes and counter‑sanctions are extending to sovereign portfolios, and negotiations on market access are being replaced by coercion. The result is a rapid reassessment of jurisdictional risks, an outflow of assets to neutral storage facilities, and the fragmentation of payment infrastructure. This path entails the greatest losses for international investments. The risk of its implementation is growing as states increasingly resort to asset freezes and restrictions on market access.
In any scenario, it is the quality of institutions — the transparency of the mandate, autonomy from political fluctuations, and management discipline — that will determine which of the “quiet giants” will remain stable in the next decade, and whose trillions will become hostages of big politics.
Tags: sovereign wealth funds, public investments, Norway, Abu Dhabi, China, GPFG, Mubadala, geoeconomics, financial fragmentation.
