An official process that could lead to Norway’s giant sovereign wealth fund slimming its exposure to big US technology stocks has moved a step forward, with the country’s finance ministry instructing Norges Bank Investment Management (NBIM) to look into the concentration risk in the equity benchmark the fund follows.
The ministry announced on Friday it had written to NBIM, which manages the NOK20.8trn (€1.9trn) Government Pension Fund Global (GPFG), asking the central bank division to analyse and assess the SWF’s investment strategy for bonds as well as the geopolitical risk and concentration risk for the fund’s equity portfolio.
It said the request was part of the follow-up to the report, presented at the end of January, by the GPFG’s newly-established expert council, which focused on fundamental issues and risks around the existence of the fund, alongside analysis of market indices used for its asset allocation — and made several specific recommendations.
In the letter made public on Friday, the Norwegian finance ministry addressed the issue of concentration risk in the equity index, saying: “Good profitability in and high valuation of the American technology companies has over time led to increased concentration in the fund’s benchmark index for equities.
“In light of this, Norges Bank is requested to analyse and assess the concentration risk in the equity index.”
The GPFG’s eight largest equity holdings are technology stocks, which collectively made up 20% of the fund’s entire value at the end of 2025.
Regarding geopolitical risk, the ministry said this had increased in recent years.
“To gain increased knowledge and understanding of how geopolitical risk can affect the fund’s investments, Norges Bank is to prepare relevant scenarios,” it said.
More detailed instructions were handed to NBIM in relation to the GPFG’s bond strategy – an asset class which makes up 26.5% of the portfolio compared to its 71.3% exposure to equities.
Overall, the bank division was asked to assess whether the current definition of the roles bond investments played in the fund still seemed appropriate, and how those considerations should be weighted.
It was also asked to assess the composition of the bond index, including which markets and segments should be included and the associated weighting principles.
The ministry specified certain aspects to consider, including whether GDP weighting still gave a satisfactory risk spread related to governments’ ability and willingness to service their debt and whether large bond markets such as US mortgage bonds should still be kept out of the index.
A month ago, presenting its annual results as well as a new set of stress tests, NBIM singled out a potential market correction in the valuation of artificial intelligence (AI) linked stocks as one of the four negative scenarios which could have a big impact on the fund’s value, denting it by as much as 35%.
But at the press conference in Oslo, NBIM chief executive officer Nicolai Tangen said even if the SWF manager did take the view that there was an AI bubble, it lacked the risk budget simply to sell out of AI companies.
Instead, he pointed to the current process of recommendations by the GPFG’s expert panel as the means by which any portfolio change could happen through NBIM’s mandate.
