NORWAY - Norway’s Finance Ministry issued a new formal mandate for the management of the Government Pension Fund Global, the world’s second-largest sovereign wealth fund.
The new mandate, which becomes effective on January 1, will require the $520bn fund to seek to limit the scope of its investments in so-called junk-rated bonds to 3% of the market value of the fund's fixed-income portfolio, the ministry said in a statement today. The ministry previously imposed no cap.
The change also includes an earlier proposal by the ministry to tighten the range by which the fund can deviate from the benchmark it tracks. The scope for management, measured as an estimated tracking error, will be cut to 1 percentage point from 1.5 percentage points.
The new mandate doesn't change how the fund places its investments, the government said.
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