World’s largest sovereign wealth fund should increase exposure to North Americans markets

Norway’s central bank is advocating a significant change in strategy in the way the Government Pension Fund Global, the world’s largest sovereign wealth fund, operates.

According to fund manager of Norway’s $1 trillion sovereign wealth fund, which happens to be the world’s largest, the fund should increase its exposure to North American markets and reduce its exposure to the European stock markets.

This gains significance since historically the fund has given a higher weightage to European stocks, and has focused on countries with which Norway does most of its trading.

According to the Norwegian central bank, which manages the Government Pension Fund Global, adopting this strategy is no longer necessary; it has recommended that the fund’s portfolio to better reflect the available pool of investments.

“The Bank’s advice is that the geographical distribution should be adjusted further towards float-adjusted market weights by increasing the weight of equities in North America and reducing the weight of equities in European developed markets,” said the central bank.

It is now up to the finance ministry and the Norwegian parliament to decide whether they will act on the advice of the central bank.

In a separate statement, the ministry stated, it would give its assessment in the spring if 2020 with regard to “Implementation of any changes in the benchmark index will be gradually over time”.

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