OSLO (Reuters) – Norway’s $ 1.15 trillion sovereign wealth fund is expected to move more assets to the United States and Canada, while reducing its holdings in Europe, the country’s minority government said on Monday.
The proposal in parliament follows an earlier recommendation from the Norwegian central bank, the fund manager, and could add $ 50 billion in investments in U.S. stocks, a Reuters calculation based on government data showed.
“The changes we are proposing will ensure that investments better represent the distribution of value creation in listed companies globally,” Finance Minister Jan Tore Sanner said in a statement.
The world’s largest sovereign wealth fund has historically given a higher weight in its portfolio to European stock markets, focusing on countries with which Norway trades the most, and a lower weight than North America.
It will however continue to favor Europe, the proposal has shown, but to a lesser extent than in the past. A move to total neutrality would have transferred well over $ 100 billion out of Europe, according to data from the Ministry of Finance.
Chart: Market value of the Norwegian investment fund –
While the fund currently owns around 1.5% of all stocks globally, its stake in Europe is 2.6% of all stocks listed while its stake in the Americas is only one. little more than 1%.
Despite its lower weighting, North America accounted for 41.6% of the total stock of the $ 760 billion fund at the end of June and would rise to 48% under the amended framework, while Europe would drop to 26, 5% against 33% currently.
Prime Minister Erna Solberg’s center-right minority cabinet must seek parliamentary approval for any major strategic changes to the fund, a process that could take months and may involve compromises.
The central bank said its advice was not based on any particular vision of future performance in individual markets or regions.
The fund last changed its regional weighting in 2012 and has since reduced its exposure to European equities from 50% of total equities to 33.5% at the end of 2019.
Editing by Gwladys Fouche and Toby Chopra