World's biggest sovereign wealth fund plans to cut U.S. Treasury holdings

Buildings in the Bardcode Project financial district in Oslo, Norway, on Tuesday, Oct. 17, 2023. Bloomberg | Bloomberg | Getty ImagesNorway's sovereign wealth fund has proposed cutting the allocation of government bonds in its $2.3 trillion investment portfolio, chiefly affecting its holdings of U.S. Treasurys, as it seeks to diversify its risk exposure and boost returns. The heads of Norges Bank Investment Management wrote in a letter to the country's finance ministry, made public Friday, that it recommended reducing the government subindex of its bond holdings from 70% to 50% — a level it said would provide sufficient liquidity during market turbulence while allowing it to seek greater returns elsewhere.The proposed reallocation would gradually cut NBIM's Treasury holdings from 34.1% to 21.9%, reduce its euro area holdings from 16.8% to 14.1%, and increase its share of Japanese government bonds to 7.4% from 4.6%. NBIM also wants to begin weighting its government bond holdings by market value instead of GDP because of the high debt loads of almost all developed economies, Treasurys under pressure The potential shift would come at a sensitive time for the Treasury market, with long...