Norway’s $1.4tn wealth fund calls for state regulation of AI

The world's largest sovereign fund, the World Wealth Fund, has called for governments to accelerate the regulation of AI. It also revealed that it will set guidelines on how the 9,000 firms it invests in can use AI "ethically".

Nicolai Tangen is the chief executive officer of Norway's $1.4tn Oil Fund, which owns an average of 1.5 percent of all listed companies worldwide. He believes that AI use is under-regulated and wants new rules to regulate its use.

"We believe that governments and authorities should regulate." He added that he had not seen any signs of regulation yet.

The fund invests heavily in companies like Apple, Alphabet and Microsoft that are using AI to transform their business.

Tangen announced that the fund will unveil in August a set standards for how it expects companies to behave when they use AI. This would put it in the fund's Responsible Investment Framework, which is the standard for ESG investments in Europe due to its size.

The question is whether governments should regulate AI, or allow innovation to flourish. They are concerned about the potential dangers of superintelligent machines if they're not regulated. The EU is currently drafting the most stringent AI rules.

Carine Smith Ihenacho said that the oil fund would also review the current season, in the fall, and decide whether it will use AI for proxy voting at the annual shareholder meetings next year.

Tangen, who also warned climate change would keep inflation high said that the fund already used advanced algorithms to reduce trading cost and complexity, and to boost internal productivity.

"I am super excited about AI. The fund has a 10-percent efficiency target over the next year. It's an ambitious goal. "We are seeing it everywhere where it drives efficiency," Tangen said.

Tangen, the fund, makes 36mn transactions a year. It believes AI will help eliminate these trades. For example, different rebalancing algorithms that could currently push it to sell a stock on one day and buy it the next.

We use AI models to determine when we should put money in the market. He said that AI models are reducing the trading activity.

He said: "You can also reduce the number and make huge savings." "It is not completely automatic." We monitor it. We are monitoring it.

Tangen stated that the fund was working on a large project, with an "unknown" but "very important" goal of reducing trading costs by modifying other things like how it rewards portfolio managers and using AI.

The fund's "hackathon", which involved 130 participants, was held last week to determine how it can use AI most effectively.