The headlines are running rampant this morning as the world's largest (and most transparent) sovereign wealth fund - Norway's Government Pension Fund - has proposed reducing the amount of government bonds in its $2.3 trillion portfolio to boost holdings of riskier debt, with US Treasuries the most affected.
Norges Bank Investment Management (NBIM), which manages the fund, said in a letter sent to the Ministry of Finance on Tuesday and published on its website, that government debt should be cut to 50% of the bond holdings from 70%.
As Bloomberg reports:
With about 30% invested in bonds, the fund had more than $615 billion of fixed-income assets in its portfolio as of June 30, about 59.5% of which were invested in government bonds, according to the latest figures on its website. Adding in government-related bonds, the allocation is 69%.
The proposed reduction in government bonds’ share to 50% would imply a decrease of about $58 billion of such bonds, according to Bloomberg calculations.
While the proposed change implies holdings of US Treasuries would drop by $75 billion, those of Japanese government bonds could increase by $20 billion, Bloomberg analysis shows. Holdings of euro area government bonds are also projected to decrease.
With growing concerns about global government debt levels and rekindled infl
