Battle brews over influence of shareholder advisers China crunch on asset management lending sparks defaults Woodford fund to mark down value of its holding in cold fusion group Fund management Add to myFT Slash European stock holdings, Norway’s $1tn oil fund urged Norges Bank recommends shifting toward greater North American weighting Share on Twitter (opens new window) Share on Facebook (opens new window) Share on LinkedIn (opens new window) Save Richard Milne in Oslo 10 HOURS AGO Print this page15 The world’s largest sovereign wealth fund should slash its investments in Europe and increase them sharply in North America, according to a recommendation from the managers of Norway’s $1tn oil fund. Norway’s central bank, which handles the management of the fund, said that the investor should move away from its current position of being overweight in European equities and underweight in US shares relative to global stock indices and more towards the norm, without naming a specific target. The $1tn oil fund, which is one of the world’s largest equity investors, on average owns the equivalent of 1.5 per cent of every listed company globally. Europe represents 34 per cent of its equity benchmark today against 40 per cent for North America. The fund, whose decisions are closely scrutinised by other shareholders, recommended moving towards a market weight adjusted for the amount of shares available to be bought, known as the free float, which currently gives Europe a share of 19 per cent and North America 57 per cent. “We are of the opinion, however, 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. The gap to market weights will then be smaller than today,” the bank said. Recommended Government Pension Fund of Norway Norway wealth fund ‘crazy’ to offload oil groups, says Lundin chief The Scandinavian country’s government will now decide whether to follow the central bank’s advice and is likely to announce its response in the spring, when it publishes an annual white paper on the fund, which is then voted on by parliament. Norway last changed the regional allocation of the fund in 2012 when it previously cut back on European equities at the height of the eurozone government debt crisis. At the time, European equities accounted for 50 per cent of the total while 35 per cent were in North America. Norway’s government defended the higher allocation to Europe before 2012 by insisting that the fund should largely mirror the country’s trade flows. But it abandoned this as it led not just to an underrepresentation of US assets but especially those from emerging markets. Still, in 2012 it decided against moving to full market weights as that would have been a “too dramatic” change in the fund. Norway’s central bank also considered on Tuesday whether it should make changes to emerging markets, including by making its own sub-index for the asset class, but recommended against making alterations. Emerging markets account for 11 per cent of the fund’s equity benchmark today and under float-adjusted market weights would be 10 per cent.