When people become wealthier, there is a temptation to make investing more complicated.
- Private equity
- Hedge funds
- Venture capital
- Alternative assets
- Infrastructure
Complex investment strategies that aren’t available to ordinary investors. But is that really how the world’s largest pools of long-term capital are invested?
The answer might surprise you.
Some of the biggest and most sophisticated pension and sovereign wealth funds in the world still rely on something remarkably simple:
Diversification, low-cost market exposure and a very long investment horizon.
And there is a lot that individual investors can learn from them.
Norway’s Government Pension Fund Global
Let’s start with the world’s largest sovereign wealth fund – Norway’s Government Pension Fund Global. Also known as “the oil fund”.
At the end of June 2026, the fund was worth around 22.7 trillion Norwegian kroner.
That’s an extraordinary amount of money.
So how is it invested?
- 72.1% in equities
- 25.8% in fixed income
- 1.6% in unlisted real estate
- 0.5% in unlisted renewable infrastructure
The striking thing isn’t the size of the portfolio. It’s how familiar the structure looks.
The vast majority is invested in listed global stocks and bonds. The equity portfolio alone gives the fund ownership of around 7,100 companies across the world.
This is not a portfolio built around trying to identify the next big investment opportunity. It’s built around owning a very large share of the global economy.
And letting time do the heavy lifting.
Nevada’s Public Employees’ Retirement System fund
The Public Employees’ Retirement System of Nevada provides another interesting example.
In June 2026 it looked after $78,687,446,342 of wealth for current and future retirees.
The fund has 3 core objectives:
- Generate a 7.25% long-term annualized return with the least possible volatility
- Structure a simple investment program to control the ability to meet long-term return and
risk objectives. - Invest so that the short-term volatility of returns will not cause the System to alter its
long-term strategy
Its portfolio is slightly more complex than Norway’s because it includes private equity, private real estate and short-term investments. But it’s focus is still on broad market exposure through systematic investment funds.
Look underneath the headline allocation and something interesting appears. Its public-market exposure is built around broad market benchmarks.
- For example, its US equity allocation is represented by the S&P 500 Index.
- Its international equity allocation uses the MSCI World ex USA Index.
- And its US bond allocation uses a US Bond Index.
At June 2026, those three areas represented around 86% of the fund’s allocation.
That doesn’t mean Nevada PERS is a purely passive investor. It isn’t.
But a substantial part of its portfolio is built around broad, transparent market exposure rather than trying to pick individual stocks or constantly predict which investments will outperform.
And there is a good reason for that. The job of a pension fund isn’t to win every year. It’s to compound capital reliably over decades.
Until recently, it has been managed by just one-person, Chief Investment Officer Steve Edmundson.
When asked by the Wall Street Journal to describe his daily trading strategy, Edmundson replied: “Do as little as possible, usually nothing.”
Sweden’s premium pension
Then there’s Sweden’s premium pension system.
Its default investment option, AP7 Såfa, is particularly interesting for retirement investors.
If a Swedish pension saver doesn’t make an active investment choice, their money is automatically invested into AP7 Såfa. By mid-2026 it managed €163,000,000,000.
And AP7 has a very clear idea about how it should invest, andis guided by investment philosophies or ”beliefs” that are divided into five categories:
- Risk-taking
- Diversification
- Risk management and strategic positioning
- Cost-efficiency
- Corporate governance and sustainability
Its Equity Fund is based on the Capital Asset Pricing Model (CAPM) and has developed towards factor-based investing.
In simple terms, AP7 is not trying to guess which shares will be the next big winners. Instead, it uses investment rules to capture different sources of return from the market.
Long-term perspective and diversification are two pillars of AP7’s management strategy.
It’s 2,100 public equity holdings are complemented by additional diversification into illiquid asset classes such as real estate, private equity, and infrastructure.
But the exposure to these illiquid assets, is capped at a maximum of 20% of the Fund’s value.
But AP7 does something else that may surprise you – it uses leverage.
Through derivatives, the fund increases its exposure to the stock market beyond the amount of capital invested.
It believes that taking more investment risk can lead to higher returns over the long term.
Of course, this works both ways. If markets rise, leverage increases the gain. If markets fall, it increases the loss.
AP7 is comfortable with that because it has a grounded and broadly diversified investment strategy.
And their fixed income fund is more vanilla than you might expect – short-term bonds issued in Swedish Kronor.
New Zealand Super Fund
The New Zealand Super Fund takes a very different approach.
It starts with a simple question – What if we kept the portfolio really simple?
The answer is the Fund’s Reference Portfolio.
It is a notional portfolio made up of low-cost, listed investments. It is designed around the Fund’s very long investment horizon and is currently made up of:
- 75% global equities
- 5% New Zealand equities
- 20% global fixed income
The Reference Portfolio isn’t the Fund’s entire portfolio. It is the starting point.
New Zealand Super Fund sets a minimum return — a hurdle — that an investment needs to beat before it is worth making.
And the hurdle is the return of it’s reference portfolio. If it couldn’t find anything better, it would simply own the reference portfolio.
In thier own words “Active investing is difficult and is not worth doing in many markets, and we agree that active investing costs more. This is why around half of the Fund is managed passively – in line with an index-linked reference portfolio”
So anything diverging aware from the reference portfolio has to earn its place.
So if the Fund wants to invest in private equity, infrastructure, timber or another less liquid investment, it has to have a good reason.
It can’t just be complicated for the sake of being complicated.
So what do these funds have in common?
They aren’t identical. Nor should they be. They have different objectives, liabilities, regulations and time horizons.
But there are some recurring principles.
1. They diversify globally
None of these portfolios depends entirely on one country, one company or one sector. The economic leaders of today won’t necessarily be the leaders of tomorrow.
A globally diversified portfolio allows the portfolio to evolve as the world changes.
2. They use broad market exposure
You don’t need to find the next Amazon, Nvidia or Apple to participate in their growth. Owning the market means you already own them. And thousands of other businesses too.
3. They think in decades
Their liabilities stretch decades into the future (as do many retirements). That frames the way they think about volatility.
A fall in markets isn’t a reason to abandon the strategy. It’s part of investing in assets that are expected to deliver returns over the long term.
4. They don’t confuse complexity with sophistication
This may be the biggest lesson. A sophisticated investor doesn’t necessarily need a complicated portfolio.
In fact, some of the most sophisticated investors in the world use remarkably simple building blocks.
Even where these funds include alternative assets, the exposure is capped at a small percentage of the portfolio.
The difficult part isn’t finding something complicated. It’s constructing a portfolio that matches the objective, managing the risk and sticking with it for long enough.
Does becoming wealthier mean you need a different investment strategy?
No.
Your financial circumstances may change as your wealth grows.
You may have more complex tax considerations.
You may need to manage different currencies, pensions, property or estate-planning issues.
But that doesn’t mean the core investment strategy needs to become more complicated.
A globally diversified portfolio of equities and bonds can remain the foundation of a very large portfolio.
The principles don’t suddenly stop working because you have more money. In fact, the opposite may be true.
The more wealth you have, the more important it can become to avoid unnecessary complexity, excessive costs and concentrated risks.
