World's Biggest Sovereign Wealth Fund Plans to Cut U.S. Treasury Holdings
Norway's $2.3 trillion investment fund says it can diversify into new areas with greater risk and returns.
TL;DR
- NBIM proposes cutting government bond allocation from 70% to 50% in its $2.3 trillion portfolio.
- This would reduce U.S. Treasury holdings from 34.1% to 21.9%.
- The fund plans to increase Japanese government bonds and non-government U.S. fixed income (corporate bonds) to 27.6% from 16.2%.
- NBIM also considers increasing holdings in mortgage-backed securities for diversification.
- The proposed changes aim to boost returns and diversify risk exposure.
- Economist Mohamed El-Erian views the move as a significant signal of traditional holders becoming less reliable.
- NBIM has made record profits from tech and AI investments but warns of unsustainable returns.
- A stress test suggests an AI correction could reduce the fund's value by 35% ($740 billion).