Norwegian Sovereign Wealth Fund Plans to Cut US Treasury Holdings by $80 Billion

The management of the Norwegian Sovereign Wealth Fund has proposed adjustments to its government bond investment portfolio to enhance returns. The Norges Bank Investment Management has written to the Ministry of Finance, suggesting a reduction in the weight of government debt in the benchmark bond index from 70% to 50%. This adjustment is expected to decrease global government bond allocations by approximately $106 billion, primarily from US Treasuries. Currently, just under 26% of the fund's total assets are allocated to fixed-income assets, and the proposal aims to reduce exposure to US Treasuries by 12.2 percentage points while increasing the allocation to non-government US fixed-income assets by 11.4 percentage points, which is expected to result in a nearly $80 billion reduction in US Treasury allocations. Furthermore, the fund's allocation to UK government bonds will remain unchanged, while its allocation to Japanese government bonds will increase by 2.8 percentage points.