Norway oil fund to increase equity weighting

Added 17th February 2017

Norway’s sovereign wealth fund should increase its allocation to equities to 70%, the Norwegian government has recommended to parliament.

Norway oil fund to increase equity weighting

The fund, which manages all Norwegian oil and gas revenues, currently has a strategic allocation of 62.5% to stocks, but the government wants to increase that to improve the long-term return prospects of the fund. To enable the increase in equity exposure, the government proposes the fund lowers its benchmark allocation to bonds to 25%. The Norwegian Pension Fund Global, as the oil fund is officially called, also has a 5% allocation to real estate.

“The proposal to increase the equity share is based on a comprehensive assessment of the recommendations received. A prerequisite for increasing the equity share is broad political support, and the ability to adhere to the chosen investment strategy also in periods of market turbulence, said finance minister Siv Jensen.

According to the proposal, the fund will also lower its inflation-adjusted annual return target from 4% to 3%. The annual return target is the maximum amount the Norwegian government can withdraw from the fund each year to meet its spending needs.

Norway’s parliament will vote on the proposals on 31 March.

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