Norway sovereign wealth fund proposes major bond portfolio shift

Norges Bank Investment Management (NBIM), the manager of Norway’s Government Pension Fund Global, has proposed a significant restructuring of its bond portfolio to the Norwegian Ministry of Finance. The proposal recommends reducing the share of government bonds in its fixed-income index from 70% to 50%.

Under this plan, the fund would substantially decrease its holdings in United States Treasury securities, potentially selling approximately $75 billion to $80 billion in debt. Exposure to eurozone sovereign debt would also be reduced by an estimated $17 billion.

Conversely, the fund intends to increase its holdings of Japanese Government Bonds (JGBs) from 4.6% to 7.4%, representing an investment of roughly $17 billion. The capital freed from sovereign debt sales would be redirected toward mortgage-backed securities (MBS) and other government agency debt instruments, which the fund views as effective diversifiers during market crises.