Norway's $1.8 trillion wealth fund advises caution in the stock market.

• NBIM, one of the world's largest investors, states that due to heightened uncertainty and concerns over the economic outlook, stock market risks are skewed towards the downside.
• Trond Grande, deputy CEO of NBIM, advised caution during a conversation with CNBC's Silvia Amaro on Tuesday.
• The world's largest sovereign wealth fund was established in the 1990s to invest the surplus revenues of Norway's oil and gas sector.

NBIM, one of the world's largest investors, stated that due to heightened uncertainty and concerns over the economic outlook, stock market risks are skewed towards the downside.

The Norwegian Investment Management Company (NBIM) emphasized the importance of being foresighted about potential issues, while maintaining its stance of not making significant asset allocation changes on a temporary basis.

Trond Grande, deputy CEO of NBIM, stated on Tuesday that they typically hold 70% in equities and 30% in bonds, but it's important to be realistic in any market situation.

"Our equity portfolio has returned more than 100%, but I think it's prudent to exercise caution given the fund's size has doubled over the past five years."

The world's largest wealth fund, established in the 1990s to invest the surplus revenues of Norway's oil and gas sector, has invested in over 8,760 companies across 71 countries globally.

The political climate in the U.S. ahead of the next month's presidential election, China's stimulus-fueled efforts to restore confidence in its economy, and the narrative of "stagnant growth" in Europe are among the concerns cited by NBIM's Grande.

Grande stated that it is prudent to exercise caution and that the risks are more likely to be on the downside in the equity markets rather than the upside.

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

The fund's results, which were slightly below a benchmark index, improved due to stock market gains and declining interest rates.

In recent months, many high-income countries have seen a decline in inflation, prompting several major central banks to loosen their monetary policies.

While the global fight against inflation is "almost won," the downside risks are "increasing and now dominate the outlook," according to the International Monetary Fund on Tuesday.

'A tough, tough environment'

The concern about the future of equities in the coming months is not limited to Norway's sovereign wealth fund alone.

Last month, Cantor Fitzgerald's chief equity and macro strategist, Eric Johnston, stated that the downside risks for assets were extremely high.

The three major concerns for the U.S. economic outlook over the next three to six months, as cited by Johnston, are declining excess savings, high consumer prices, and somewhat restrictive Federal Reserve monetary policy.

"Johnston stated on CNBC's "Closing Bell" on Sept. 12 that China, accounting for 17% of global GDP, poses a challenge, making the economic climate difficult."

Before the Fed cut interest rates by half a percentage point last month, Johnston made his remarks.