India's weight in the portfolio of Norway's sovereign wealth fund, the world's largest with assets exceeding $2 trillion, declined in 2025 after the country's investments delivered negative returns during the year, according to media reports citing the fund's latest annual filings.
The Norges Bank Investment Management portfolio reduced India's allocation by 40 basis points to 2.1% as of December 31, 2025. The decline comes after India emerged as the only market in the fund's portfolio to post negative returns last year.
Data cited in media reports showed that the fund's India portfolio generated a dollar return of -1.4% in 2025, even as the sovereign fund recorded an overall global return of around 15% during the year.
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China, Taiwan Gain Weight
Data cited in media reports showed the reduction in India's allocation coincided with an increase in weight for other Asian markets. China's share in the fund's portfolio rose by 30 basis points to 3.6%, while Taiwan's weight increased by 20 basis points to 2.7%, pushing the island economy ahead of India in the sovereign fund's allocation.
Market experts attribute the shift primarily to the fund's market-value-based indexing strategy, where allocations automatically adjust depending on the performance of underlying stocks and markets.
Under this method, stronger-performing markets typically gain higher weight in the portfolio, while weaker-performing ones see allocations decline.
Passive Allocation Model
The fund's global investments are based on a reference index set by the Norwegian Ministry of Finance, which uses the FTSE Global All Cap Index as a starting point.
A spokesperson for Norges Bank Investment Management told media outlets that the fund does not comment on the outlook for specific markets. "The fund is invested globally according to a reference index set by the Norwegian Ministry of Finance, which uses the FTSE Global All Cap index as a starting point. We do not comment on the outlook for specific markets," the spokesperson said.
Cautious Global Investment Environment
Market participants say global institutional investors have become increasingly cautious amid geopolitical uncertainties and uneven economic recovery across regions.
Kranthi Bathini, director of equity strategy at WealthMills Securities, said large global funds are currently adopting defensive positioning. “Given the current global uncertainty, many large global funds are adopting a defensive strategy by reducing their equity exposure and increasing their cash positions,” Bathini said.
He added that improved corporate earnings growth could encourage long-term investors to return to equity markets over time. Despite the recent decline, India remains an important investment destination for the fund. The value of Norges Bank's India holdings had doubled to about $36 billion between 2021 and 2024, before falling to around $31.4 billion by the end of 2025, media reports said.
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