Norway’s enormous sovereign wealth fund is shifting its fixed-income strategy away from heavy reliance on safe government bonds.
The overhaul would slash nearly $80 billion from its U.S. Treasury positions, reports Bloomberg.
This sovereign wealth fund, funded by Norway’s oil and gas revenues, ranks as the world’s largest with assets topping $2.3 trillion.
Managers aim to lower the government bond weighting in the benchmark from 70 percent to 50 percent, freeing capital for corporate debt, mortgage-backed securities and other higher-yielding instruments.
U.S. Treasurys currently make up the biggest slice at roughly $215 billion, and the plan would drop their share of the bond portfolio from 34.1 percent to 21.9 percent.
Overall dollar exposure stays nearly unchanged as the fund boosts holdings of U.S. non-government debt.
The proposal follows a finance ministry review and seeks greater diversification to improve returns without sacrificing liquidity during market stress.
Any reallocation would occur gradually to control trading costs and limit market impact.
The changes would align the benchmark more closely with broad market indexes that include a wider mix of developed-market debt.
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