Norway considers shifting sovereign wealth fund away from Europe
Norway is considering shifting the balance of investments in its $1trillion (£824bn) sovereign wealth fund away from Europe to focus more on Asia and the Americas.
Investor confidence in Europe has been faltering recently as the region’s economy slows, while North American equity markets are growing faster than European ones.
“This (regional weighting) is exactly the question that we are considering now, and we are giving advice to the (finance) ministry about regional weighting of the equity reference index, by the end of this month probably,” said Egil Matsen, the top public official responsible for the fund.
“One of the questions is whether the current weighting, whether there are reasons to adjust that,” Matsen added.
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The fund, which is the world’s largest sovereign wealth fund, is managed by a unit of Norway’s central bank which advises the finance ministry and parliament, which ultimately control its mandate.
News of a possible shift in strategy comes after the fund reported strong second quarter results earlier, reporting a three per cent return on investment. The fund earned 256bn Norweigan crowns (£24bn) during the period.
The country invests all proceeds from its oil and gas production into the fund, which is worth an equivalent to $197,000 for each Norweigan citizen.
The fund currently has 70 per cent of its total value invested in shares, but has gradually been reducing the proportion held in EU countries in favour of other markets.
Since 2012, the last year the geographical balance of the fund was reviewed, it has reduced its exposure to European shares from 50 per cent of its total equity holdings to around 34 per cent by the end of last year.
Some 43 per cent of the fund’s investments were in North America at the end of last year, with 17% in Asia.
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