'Time to be a little bit cautious': Norway's $1.8 trillion wealth fund issues stock market warning

Norges Bank Investment Management (NBIM), one of the world's largest investors, said heightened uncertainty and concerns over the economic outlook mean that stock market risks are tilted to the downside.

NBIM, which manages Norway's $1.8 trillion sovereign wealth fund, said that it was important to be clear-sighted about concerns down the road, even as it stands by its position of not making large asset allocation shifts on a short-term basis.

"We [started] with 70% in equities and 30% in bonds, and that's typically where you will find us in any market situation. Now, that said, you have to be realistic," Trond Grande, deputy CEO of NBIM, told CNBC's Silvia Amaro on Tuesday.

"The fund that we run has doubled in size over the last five years. Our equity portfolio has returned more than 100%. So, I think it is a time of being a little bit cautious."

Norway's wealth fund, the world's largest, was established in the 1990s to invest the surplus revenues of the country's oil and gas sector. To date, the fund has put money in more than 8,760 companies in 71 countries around the world.

NBIM's Grande cited concerns including the political climate in the U.S. ahead of next month's presidential election, China's stimulus-fueled bid to restore confidence in the world's second-largest economy and the narrative of "stagnant growth" in Europe.

"So, it is a time to be a little bit cautious, and I think the risks are more on the downside in the equity markets than on the upside," Grande said.

NBIM's stock market warning comes shortly after Norway's sovereign wealth fund reported a third-quarter return of 4.4% and profit of 835 billion Norwegian kroner ($76.1 billion).

The results, which came in marginally below a benchmark index against which