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Norway should shift wealth fund investments to North America, says central bank

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Norway should shift wealth fund investments to North America, says central bank

Norway should shift some of its $1 trillion sovereign wealth fund from European stock markets and invest more in the United States and other North American markets, the Norwegian central bank Norges Bank said.

The Government Pension Fund Global, which invests the returns of Norway's oil and gas production, has focused primarily on stocks in Europe and less on those of North America. However, the central bank now recommends "that the geographical distribution should be adjusted further towards float-adjusted market weights" by shifting to North American equities.

That could spell the potential movement of billions of euros worth of investments away from Europe to North American regions. However, the decision to change the fund's portfolio rests with the parliament and the finance ministry, which said "Implementation of any changes in the benchmark index will be gradually over time."

The fund previously maintained a policy of directing investment to countries that Norway did the most trade with, but eased those rules in 2012. It has since reduced its focus on European shares from 50% of the total to about 34% by the end of last year, and increased its North American investment share to 43%.