Norway accepts the concentration it cannot easily hedge

Norges Bank has told Norway's government not to cap the largest companies, sectors or markets in the Government Pension Fund Global. Concentration, it says, must be accepted as a feature of a market-weighted index — and it uses the words "at this time". In this episode: why the stress tests do not price that decision (there is no capped index in them to compare against); what the cap back-tests in the appendix actually show — 8.80% a year uncapped since 1994, 8.71% with a 1% company cap, 8.82% with a 3% cap; the second letter, which cuts government bonds from 70% of the bond benchmark to 50% and adds agency mortgage-backed securities; and the reason a defined-benefit pension fund should not copy any of it. Sources: Norges Bank's two submissions to the Ministry of Finance, 1 September 2026. Full brief: https://www.universalassetowners.com/intelligence/norway-accepts-the-concentration-2026-09-03/