Norway wealth fund plans to cut nearly $80 billion in Treasurys

Norway's sovereign wealth fund would reduce its U.S. Treasury holdings by nearly $80 billion. The fund is shifting its fixed-income strategy away from heavy reliance on government bonds. Managers aim to lower government bonds' benchmark weighting from 70 percent to 50 percent. The change would free capital for corporate debt, mortgage-backed securities and other higher-yielding instruments. U.S. Treasurys currently account for roughly $215 billion of the fund's holdings. Their share of the bond portfolio would fall from 34.1 percent to 21.9 percent. The fund has assets topping $2.3 trillion. Norway's oil and gas revenues fund the sovereign wealth fund. Overall dollar exposure would stay nearly unchanged. The fund would increase its holdings of U.S. non-government debt. The proposal follows a finance ministry review. The proposal seeks greater diversification to improve returns without sacrificing liquidity during market stress. Any reallocation would occur gradually to control trading costs and limit market impact. The changes would align the benchmark more closely with broad market indexes that include a wider mix of developed-market debt.