World’s largest sovereign wealth fund moves to reduce U.S. Treasury holdings

Norway’s sovereign wealth fund, the world’s largest, has proposed cutting government bond allocations in its $2.3 trillion portfolio, chiefly reducing U.S. Treasury holdings, according to CNBC. Norges Bank Investment Management told Norway’s Finance Ministry it wants to lower government bonds from 70% to 50%, cutting Treasury exposure from 34.1% to 21.9% while increasing Japanese government bonds and nongovernment U.S. fixed income like corporate bonds.

The move comes as long-dated Treasury yields hit decade-highs amid fiscal concerns. Economist Mohamed El-Erian called the signal significant, noting traditional Treasury buyers are becoming less reliable. NBIM also plans greater exposure to mortgage-backed securities, judging them well-suited to reduce volatility during market downturns, despite record recent tech-driven gains.