Norges Bank Investment Management (NBIM) has recommended that the Norwegian Government Pension Fund Global (GPFG) should buy more equities in North America, and reduce the amount it holds in Europe.

The recommendations are in response to Norway’s Ministry of Finance’s request for an assessment by NBIM of the geographical distribution and composition of the benchmark index for equities for the fund.

In its response, NBIM said the geographical distribution of the fund’s benchmark index for equities has been adjusted over time towards float-adjusted market weights.

“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,” it stated.

However, NBIM specified that the method and rules for the composition of the sub-index for emerging markets in the benchmark index for equities should not be changed. It noted that it has had a positive experience from its 20 years as a sovereign minority shareholder in companies in emerging markets.

“The benchmark index should continue to include all companies in all developed and emerging markets in the FTSE Global All Cap,” NBIM stated.

NBIM noted that its recommendations are not decisions: “The advice and the assessments have been sent to the Ministry of Finance for further discussion. It is the Ministry that makes decisions on geographical distribution and the composition of the sub-index for equity investments in emerging markets.”

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