Norwegian sovereign wealth fund plans massive reduction in US government bonds

London. The world's largest sovereign wealth fund from Norway wants to reduce its investments in US government bonds. The comprehensive rebalancing of the portfolio is intended to improve returns, according to a letter dated Tuesday from Norges Bank Investment Management (NBIM).

Specifically, the manager of the $2.3 trillion fund recommends reducing the proportion of government bonds in its reference index from 70 to 50 percent.

According to calculations by the Reuters news agency, this would mean a reduction in US government bonds worth almost $80 billion, down from around $215 billion at the end of June. The decision of the fund, which owns an average of 1.5 percent of all listed companies worldwide, could influence financial markets. The “Financial Times” even assumes a reduction of more than $100 billion.

The government bond markets had recently come under pressure due to rising inflation and high government debt, which unsettled investors. One reason for this: The US national debt has risen above the $40 trillion mark for the first time.