Norway’s $2.3 Trillion Sovereign Wealth Fund Plans Major Cut to US Treasuries

Norway’s massive sovereign wealth fund is proposing a major reduction in its holdings of U.S. Treasury bonds, potentially cutting its exposure by nearly $80 billion. The fund, managed by Norges Bank Investment Management (NBIM), is the world’s largest sovereign wealth fund, with assets of roughly $2.3 trillion.

NBIM has recommended reducing the share of government bonds in its benchmark bond index from 70% to 50%. U.S. Treasuries, which currently make up the fund’s largest government-bond exposure, would take the biggest reduction.

The proposed changes would reduce the fund’s U.S. Treasury holdings from about $215 billion to roughly $135 billion, representing a potential cut of nearly $80 billion.

The move is part of a broader effort to improve returns and diversify risk. Global government bond markets have faced increased pressure as investors worry about rising government debt and inflation. NBIM wants to shift some of its money away from government bonds and into other forms of fixed-income investments that could offer higher returns.

The proposed strategy would increase investments in non-government debt, including U.S. mortgage-backed securities and other government-related bonds. Interestingly, this does not mean Norway is abandoning U.S. assets.

The fund’s overall exposure to the U.S. dollar would remain broadly stable at around 50%, with money moving from Treasuries into other dollar-denominated assets.

Despite the size of the proposed reduction, Norway is not planning to dump $80 billion of Treasuries immediately. NBIM said any changes would be implemented gradually to limit market disruption and transaction costs. The proposal must also go through Norway’s government and parliamentary process, meaning implementation is not expected until 2027 at the earliest.

The fund is also considering increasing its investments in unlisted assets as part of a separate effort to diversify its portfolio.

Norway’s sovereign wealth fund is one of the biggest investors in global financial markets. It owns, on average, around 1.5% of all listed companies worldwide, giving its investment decisions significant influence. A major reduction in U.S. Treasury holdings could therefore attract attention from investors already concerned about demand for U.S. government debt.

However, because Norway plans to gradually redirect much of the money into other U.S. dollar assets, the move is better understood as a reallocation within its bond portfolio rather than a complete retreat from the United States.