Tuesday 27 August 2019 4:23 pm

Norway's $1tn sovereign wealth fund could shift investment away from Europe

Norway’s $1tn (£820bn) sovereign wealth fund should shift billions of dollars of investments from European stock markets to the US, its fund manager recommended today.

The world’s largest sovereign wealth fund, which invests Norway’s oil wealth, has traditionally given a greater weighting to European stocks and a lower weighting to US equities.

However, the Norwegian central bank, which manages the fund, said today that it wanted the fund’s portfolio to invest more heavily in the US.

Read more: Norway considers shifting sovereign wealth fund away from Europe

“We can all see that both return and the common measure of risk has been better in North America in the past years than it has been in the rest of the world,” Egil Matsen, the deputy central bank governor in charge of the fund said.

He did not say how much of the value of the fund could potentially shift to North American equities.

“We are not specific on that, and that is a conscious decision,” he said.

Norway’s government will now decide whether to follow the advice of the central bank.

It is likely to confirm its choice in an annual white paper on the fund which it publishes in the spring. 

Read more: Norway’s sovereign wealth fund to divest from fossil fuel investments

Parliament will then be asked to vote on that decision.

Norway eased its policy of investing in its key trading partners in 2012.

The fund has since cut its proportion of European shares from 50 per cent of the total equity holdings to about 34 per cent by the end of 2018.

Around 43 per cent of its investments were in North America at the end of 2018 and 17 per cent in Asia.

Photo credit: Getty