Norway’s Government Pension Fund Global, the world’s largest sovereign wealth fund with approximately $2.3 trillion in assets, has proposed cutting roughly $106 billion from its global government bond holdings. This 20-percentage-point reduction in government bond weighting, from 70% to 50%, would hit US Treasuries the hardest with a potential reduction of $75 billion to $80 billion. The freed capital would be redirected toward higher-yielding non-government fixed income such as corporate bonds and mortgage-backed securities. The fund also plans to change its calculation method by using market value instead of GDP to measure bond weightings. The proposal, which still requires approval from Norway’s Ministry of Finance, comes amid rising Treasury yields and ballooning sovereign debt levels worldwide.
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