Oslo, Norway, 4 September (Brussels Morning Newspaper) – Norway’s vast sovereign wealth fund has proposed sharply reducing its exposure to US government debt, a portfolio shift that could result in nearly $80 billion (£60 billion) being removed from US Treasury holdings. The Norway wealth fund, managed by Norges Bank Investment Management (NBIM), is seeking broader changes to its bond benchmark aimed at improving diversification and returns.
Why is Norway considering a major Treasury reduction?
NBIM has recommended reducing the share of government bonds within the fund’s benchmark bond index from 70% to 50%, according to a letter reported by Reuters.
The proposed restructuring would have its largest effect on US Treasuries, currently the fund’s biggest government bond exposure.
Reuters calculated that the changes could reduce the fund’s approximately $215 billion in US Treasury holdings at the end of June by nearly $80 billion. The benchmark allocation to US government bonds would fall from 34.1% to 21.9%.
The proposal does not amount to an immediate sale. NBIM said it would wait for Norway’s Ministry of Finance to respond and that any approved changes would be implemented gradually to reduce transaction costs and potential market disruption.
NBIM seeks greater exposure to non-government debt
The Norway wealth fund is proposing increased investment in non-government debt, including mortgage-backed securities, as part of its effort to improve diversification and capture additional risk premiums.
The proposed changes would increase US non-government debt’s weighting in the bond benchmark from 16.2% to 27.6%. As a result, the overall US dollar weighting would decline only marginally, from 52.9% to 52.5%.
Euro-area government debt would fall from 16.8% to 14.1%, while Japanese government bonds would increase from 4.6% to 7.4%. Britain’s allocation would remain unchanged at 4.2%.
Norges Bank says 50% government share is sufficient
Norges Bank Governor Ida Wolden Bache and NBIM chief executive Nicolai Tangen said in the letter that they recommended reducing the government component of the bond index from 70% to 50%.
They added that a 50% government bond share would be sufficient to meet the fund’s liquidity requirements, including during periods of financial market turbulence.
The recommendation comes as global government bond markets face pressure from concerns over inflation, rising public debt and higher long-term borrowing costs.
Norway’s fund remains a major global investor
Official NBIM figures show the Government Pension Fund Global was worth 22.683 trillion Norwegian kroner at the end of the first half of 2026. Fixed-income assets represented 25.8% of the portfolio, while equities accounted for 72.1%.
The fund returned 9.4% during the first six months of 2026, equivalent to 1.753 trillion kroner. Government bonds returned 0.5%, with the United States, Japan and Germany representing its three largest government bond holdings.
Its enormous scale means even gradual changes to its benchmark can involve tens of billions of dollars in securities.
What happens next?
Norway’s Ministry of Finance will consider NBIM’s recommendations before any benchmark changes are implemented. The fund operates within an investment mandate determined by Norwegian authorities, while NBIM manages the portfolio within those parameters.
If approved, the proposed Norway wealth fund changes would be introduced gradually rather than through an abrupt disposal of US Treasuries. The proposal therefore represents a significant potential rebalancing of the fund’s fixed-income portfolio, rather than an immediate withdrawal from US government debt.
