Our average ownership in listed European companies is almost three times our average holdings in Asia or the Americas. Slide 12: Changing regional allocation (starting point) At the start of this year, more than half of the Fund was invested in Europe. As the Fund has grown, we have come to realise that a more even distribution between regions will better enable the Fund to take part in global value creation. Slide 13: Changing regional allocation (target) Recently, a new principle for the regional allocation of the Fund’s assets has been approved. A consequence of this principle is that the relative allocation to Europe is reduced. The Fund’s relative holdings in the Americas, Asia and emerging economies will increase accordingly. For the Fund as a whole, a more even allocation across regions will improve the overall long-term trade-off between risk and expected return. In accordance with the new allocation of the Fund’s assets, new purchases will primarily be made outside of Europe, until the adjustment process is completed. As the Fund receives inflows of fresh capital on month-by-month basis, we are able to undertake the adjustment through new purchases. This will ensure a gradual process, and will not entail a large sell-off on our part. Instead, the effect will be merely a temporary drop in our purchases of European assets. Under the new principle, the Fund will still be overweight in European assets, compared to a market neutral position.
When growth finally resumes, countries that have improved their economic structures and public finances will be well positioned to take advantage of the upturn. Ladies and gentlemen, thank you for your attention. 6  BIS central bankers’ speeches  Slide 1: Landes quote  Slide 2: Output gap: A boom-bust economy  BIS central bankers’ speeches  1  Slide 3: Current account balance: Large external deficits  Slide 4: Output gap: A boom-bust economy  2  BIS central bankers’ speeches  Slide 5: Measures were taken  Slide 6: Two golden decades  BIS central bankers’ speeches  3  Slide 7: The fund mechanism and fiscal policy  Slide 8: The cash flow grew rapidly  4  BIS central bankers’ speeches  Slide 9: Key characteristics  Slide 11: Considerable overweight in Europe  BIS central bankers’ speeches  5  Slide 12: Changing regional allocation (starting point)  Slide 13: Changing regional allocation (target)  6  BIS central bankers’ speeches  Slide 14: Fixed income: new benchmark  Slide 15: Risk has many facets  BIS central bankers’ speeches  7