Just over a year ago we noted that, after being forced to withdraw at least $15 billion to fund 2017 budget deficits, the $860 billion Norwegian sovereign wealth fund announced that it was going all in on the global equity bubble to try to make up the difference. The change resulted in 75% of the fund’s capital being allocated to global equities, up from the then current 60%.

The central bank’s board, which oversees the fund, on Thursday recommended an increase in the equity share to 75 percent from 60 percent. That will raise the expected average annual real return to 2.5 percent over 10 years and to 3.5 percent over 30 years, compared with 2.1 percent and 2.6 percent, respectively, under the current setup.

The world’s largest sovereign wealth fund said that it expects an annual return of only 0.25 percent on bonds over the next decade and that the expected “equity risk premium,” or return on stocks over government bonds, will be just 3 percentage points in a cautious estimate.

“In our analyses, this is clearly evident in global data: internationally, growth in firms’ cash flows and equity returns are correlated with growth in the global economy,” Deputy Governor Egil Matsen said in a speech Thursday in Oslo. “Global economic growth in the coming years is expected to be below its historical level. This ‘pessimism’ is partly related to the driving forces behind the low level of the real interest rate.”

Now, as the FT points out, the world’s largest sovereign wealth fund has decided that even equities don’t provide quite enough risk and has appealed to the finance ministry to be allowed to invest in private equity.

To start with, Norway’s $1.1tn oil fund would consider investing in private equity funds or alongside them as part of a gradual approach, Norges Bank Investment Management said on Tuesday in a submission to the country’s finance ministry.

The fund is allowed to invest in listed companies only and buy stakes of less than 10 per cent. According to the advice, it should be given permission to own more than 10 per cent of an unlisted company, as it is allowed to do with unlisted property investments.

“The fund’s size, long-term horizon and limited liquidity needs may make it well-suited to investing in unlisted equity. A broader investment universe may also enable the fund to be invested in different types of company to those that are available in the public equity market,” NBIM said in its advice.