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The benchmark portfolio for the Government Pension Fund – Global

Norges Bank's letter to the Ministry of Finance of 5 February 2008

5 February 2008


In its letter dated 16 November 2007, the Ministry of Finance asked for input from
Norges Bank for a fresh assessment of emerging equity markets in the benchmark
portfolio for the Government Pension Fund – Global. The Ministry did not ask for an
assessment of emerging fixed income markets, but we assume that this may become
relevant later in 2008. Norges Bank was asked to focus on assessments of settlement
and clearing systems and on issues related to corporate governance at companies
registered in the relevant emerging equity markets.
Emerging equity markets have been analysed in several letters from Norges Bank to
the Ministry of Finance. The list of countries included in the equity benchmark
portfolio now includes 27 countries, of which five are currently classified as emerging
equity markets. The Ministry previously issued a list of countries over and above
those in the benchmark portfolio in which the Fund could be invested. With effect
from the summer of 2007, these guidelines were amended such that the Ministry now
expects Norges Bank Investment Management (NBIM) to have established internal
guidelines for the approval of new countries in the investment universe. To date, 11
countries outside the current benchmark portfolio have been approved.
The Ministry of Finance requires Norges Bank to prepare an overview of relevant
issues related to valuation, performance measurement, and the management and
control of risk for investments in each individual market and currency1 before we
invest in new countries. These assessments are to comply with the requirements set
out in the Regulation and Guidelines, and they must also be documented. Enclosure 1
presents the factors assessed by NBIM before a country can be approved for inclusion
in the investment universe.

Read the whole letter  (PDF)>>