OSLO (Reuters) – Norway’s sovereign wealth fund, the world’s largest, will streamline its $300 billion fixed-income portfolio by cutting emerging market bonds from the benchmark index it tracks, the Finance Ministry said on Friday

Government and corporate bonds issued by Chile, the Czech Republic, Hungary, Israel, Malaysia, Mexico, Poland, Russia, South Korea and Thailand will be removed, the ministry said in a statement.

“Along with certain adjustments to the country weightings for government bonds, the changes proposed will facilitate lower transaction costs in the management of the Fund,” it added.

The fund will still be able to buy emerging market bonds if fund managers want to actively invest in them, rather than passively tracking the benchmark index, although such paper would be capped at five percent of the fixed-income portfolio.

The Norwegian wealth fund, currently worth $1.05 trillion, invests around 30 percent of its assets in fixed income. The 70 percent invested in equities was not affected by the decision.

In 2017, the central bank, which manages the fund, proposed cutting 20 currencies from the fixed-income benchmark, leaving only U.S. dollars, euros and British pounds.

Friday’s decision means Danish, Swedish, Swiss, Japanese, Canadian and Australian bonds will remain part of the benchmark, as will those of Singapore, New Zealand and Hong Kong.

The proposals must be agreed by parliament, but as the Norwegian government holds a majority, the white paper is expected to be passed in June.

For a graphic of largest SWFs, see – tmsnrt.rs/2tskfub

WIND FARMS, SOLAR FARMS

The fund’s present mandate for renewable investments will double in value to 120 billion crowns ($14 billion), the ministry said, allowing investment in unlisted renewable infrastructure projects, such as wind or solar farms – something long demanded by environmental groups.

“Finally the government is…letting the oil fund invest in projects that can supply the world with green renewable energy,” said Else Hendel, interim policy director at WWF-Norway.

Hendel said the new mandate represented only 1.3 percent of the present value of the fund. “It is a start but Parliament should increase it further,” she said.

The ministry also proposed tightening its rules for excluding from its investments companies that derive more than 30 percent of their revenues or activities from thermal coal.

It appointed a committee to review the fund’s ethical guidelines. The fund cannot, for instance, invest in companies that produce tobacco, nuclear weapons and cluster munitions.