Global fund to cut US bond holdings

The Norwegian Sovereign Wealth Fund, valued at $2.3 trillion, plans to reduce its holdings of U.S. government bonds, particularly Treasury securities, from 34.1% to 21.9% as part of a portfolio rebalancing aimed at diversifying risks and increasing returns. It will also cut its euro zone bond exposure from 16.8% to 14.1% and raise its Japanese bond stake to 7.4%. The fund aims to base its bond holdings' weights on market value rather than GDP, while increasing investments in non-government fixed income assets such as corporate bonds and real estate assets to achieve higher yields and reduce portfolio volatility. This shift comes at a time when U.S. Treasury yields are rising amid concerns over increasing American debt burdens, which could impact global debt markets. Currently, the fund holds $1.65 trillion in equities and $592 billion in fixed income instruments. It has achieved record profits thanks to investments in technology and artificial intelligence companies but has warned that the current yields may not be sustainable if markets decline.

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