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Norway's Sovereign Wealth Fund Proposes Deep Cuts To U.S. Treasury Holdings
HuffPost • • business
Key Points:
- Norway’s $2.3 trillion sovereign wealth fund plans to reduce its government bond allocation from 70% to 50%, with a significant cut to U.S. Treasuries holdings by nearly $80 billion to improve returns and diversify risk.
- The fund aims to increase investments in non-government debt such as U.S. mortgage-backed securities, while maintaining overall U.S. dollar exposure around 50%, shifting the bond portfolio mix rather than reducing dollar exposure drastically.
- Proposed changes also include a modest reduction in euro area debt and an increase in Japanese government bonds, aligning the index more closely with broader market weightings.
- Any adjustments will be implemented gradually starting no earlier than 2027 to minimize market impact and transaction costs, pending approval from Norway’s finance ministry and parliament.
- The fund is also considering increasing investments in unlisted assets like real estate and renewable energy to reduce concentration risks in its equity portfolio, particularly related to U.S. tech stocks.
