India loses 40 basis points weightage in Norway Pension funds; China and Taiwan gain

Most global funds including the Norway Pension Fund following what is known as market value based indexing.

• Norges Bank cut India's portfolio weight to 2.1% in 2025
• India was the only country with negative returns in the fund
• China and Taiwan saw their portfolio weights increase

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Norges Bank, world’s largest sovereign fund managing over $2 trillion assets, has reduced India’s weight in its portfolio by 40 basis points to 2.1% as on December 31, 2025, latest annual filings for the fund showed. This is a consequence of India’s underperformance compared to other emerging markets in 2025, say market experts. The development comes after the India portfolio of the fund underperformed its peers significantly in 2025. While the fund had a stellar year posting 15% return, India remained the only country that gave a negative return with the India portfolio of the fund falling by 1.4% during the year, data showed.

This fall in India’s weight has directly benefited China with country’s weight going up by 30 basis points to 3.6%. Even Taiwan saw its weight go up by 20 basis points to 2.7% giving the island nation higher weightage than India in the Norway Pension Fund portfolio, data showed.

Most global funds including the Norway Pension Fund following what is known as market value based indexing meaning the weightage of various stocks within the index keeps changing based on the stock performance of the company. Outperformer stocks see their weightage going up while stocks that don’t do well see their weightage reduced. Even Indian benchmark indices such as Nifty and Sensex follow similar methodology. Sometimes, there are manual interventions in the index such as adding or removing a company from the portfolio. Like last month, Norges Bank had dropped Adani green energy from its portfolio due to ongoing SEC investigation.

"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." said a spokesperson of Norges Bank Investment Authority in response to Moneycontrol queries.

Market experts say India may continue to lose weightage in the Norway pension fund in the near term as Indian market continues to underperform compared to other emerging economies.

“Given the current global uncertainty, many large global funds are adopting a defensive strategy by reducing their equity exposure and increasing their cash positions. This is a common approach among long-only funds during periods of heightened geopolitical tensions.” Said Kranthi Bathini, director of equity strategy at WealthMills Securities. “When the market starts seeing a revival in corporate earnings, that could also encourage long-only investors to shift capital back from cash or debt instruments into equities over the longer term.”

Taiwan was the best performing market within Norges portfolio with 37% dollar returns followed by Canada with 33% returns, data showed.

In the three year period between 2021 and 2024, the India portfolio of Norges Bank doubled in value to reach $36 billion. However, as of December 31,2025 the value of India portfolio of Norges Bank fell to  $31.4 billion, data showed.

Until 2019, Norges Bank was investing around 20-30% of its total India investments in fixed income instruments, but over the years the fund has increasingly focused on equity and currently debt comprises of less than 5% of its portfolio.