The world's largest sovereign wealth fund, managed by Norway, is preparing to shift its investment strategy by scaling back its allocation to government bonds.
According to reports from several international media outlets on the 4th, Norges Bank Investment Management, which oversees the fund, has proposed reducing its exposure to U.S. Treasuries by approximately $80 billion. This move is intended to diversify risk and enhance overall investment returns.
The proposal was detailed in a letter sent to the Norwegian Ministry of Finance on September 1st, which was made public on the 4th. The recommendation calls for a reduction in the weight of government bonds within the fund's benchmark bond index from 70% to 50%.
Currently, fixed-income assets account for less than 26% of the fund's total portfolio. Under this proposed adjustment, the allocation to U.S. Treasuries would decrease by 12.2 percentage points to 21.9%, which translates to an estimated reduction of $80 billion.
It is important to note that this is currently just a proposal from the central bank's investment arm. The final decision will hinge on reviews by both the Ministry of Finance and parliament, with a conclusive outcome not expected until the spring of 2027.
CNBC reports indicate that this adjustment arrives during a delicate period for the U.S. bond market. Investors are increasingly concerned about the fiscal outlook and the mounting debt burden, causing long-term Treasury yields to climb to their highest levels in a decade.
Economists note that while the planned reduction in U.S. debt holdings is not massive in absolute terms, it sends a powerful signal: the willingness of traditional holders and buyers to absorb government debt is waning.
The Norwegian sovereign wealth fund manages assets worth approximately $2.34 trillion, with investments spanning around 7,100 companies across more than 50 countries and regions. In the first half of this year, the fund reported a record investment return of NOK 1.75 trillion (around RMB 1.24 trillion).