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Norges Bank Investment Management wants to reduce its government bond allocation from 70% to 50%, with U.S. Treasurys taking the largest hit
Norges Bank Investment Management, which manages Norway's $2.3 trillion sovereign wealth fund, has proposed reducing the share of government bonds in its portfolio from 70% to 50%, a shift that would cut its U.S. Treasury holdings from 34.1% to 21.9% of its bond index.
The recommendation came in a letter sent to Norway's Ministry of Finance on Sept. 1 and made public Friday. The fund's leaders, Norges Bank Governor Ida Wolden Bache and NBIM CEO Nicolai Tangen, said a government bond share of 50% would be sufficient to meet the fund's liquidity needs, including during periods of market turbulence, while freeing up room to pursue higher returns in other segments.
The proposal would also reduce the fund's euro area government bond holdings from 16.8% to 14.1%, while increasing its Japanese government bond allocation from 4.6% to 7.4%. Holdings of non-government U.S. fixed income, such as corporate bonds, would rise to 27.6% from 16.2%, according to CNBC.
