Norway Fund Proposes US Treasury Holdings Cut

Norway's sovereign wealth fund, the world's largest, has proposed a significant restructuring of its bond investments, aiming to reduce its exposure to government debt and increase holdings in higher-yielding assets. The proposal, outlined in a letter from Norges Bank Investment Management (NBIM) to the Ministry of Finance on Tuesday, September 1, 2026, and made public on Friday, September 4, recommends lowering the allocation to government bonds within the fund's benchmark index from 70 percent to 50 percent. This shift is intended to diversify risk and bolster returns, particularly as global government bond markets face pressure from rising inflation, increasing debt levels, and soaring borrowing costs. US Treasury securities, which represent the fund's largest government bond holding, are expected to be most affected by the proposed changes. Under the proposal, the fund's allocation to US government bonds would decrease from 34.1 percent to 21.9 percent of its bond index. This could translate to a reduction of approximately $75 billion to $80 billion in US Treasury holdings, based on the fund's approximately $215 billion to $224 billion in such assets at the end of June.