Norway currency
Norwegian banknotes of different denominations. Reuters

Norway’s oil-fueled sovereign wealth fund, the world's largest, said on Friday that it's continuing to move money out of bonds and into equities, reflecting a broader global souring on fixed income markets.

"I have said before it is less a reflection of enthusiasm for the equity markets and more a lack of enthusiasm for the bond markets," fund CEO Yngve Slyngstad said, according to reports.

The fund said it lowered its bond holdings to 35.7 percent, down from 36.7% a year ago. The fund's stock holding increased to 63.4 percent from 62.4 percent.

The fund said a slump in emerging markets held back returns in the second quarter over concerns in a slowdown in Chinese economy, Bloomberg reported Friday.

The investor had its second-best year in 2012 but has since shifted its assets away from investments in Europe to emerging markets in Asia and South America due to Europe’s economic woes. Currently the fund invests 10 percent of its equity portfolio in emerging markets, however recent projections of a weaker Chinese economy might prompt the fund to change its strategy.

During the financial crisis the Chinese government launched a 4 trillion Yuan stimulus package which helped the Shanghai Stock Exchange Composite Index (Shcomp:IND) double in 10 months.

However, the Chinese government is determined to move away from the investment led growth model, slowing the Chinese economy down. The SHCOMP has fallen 43 percent from its high.

Norway’s sovereign wealth fund lost 5.9 percent in its stock investments in emerging in markets in the second quarter, even though the fund rose by 0.1 percent thanks to U.S. and Japanese stocks.

“Equity returns were boosted by a strong market in the U.S. and Japan, while emerging markets pulled in the other direction,” Yngve Slyngstad, the fund’s chief executive officer, said. “Fixed-income returns were undermined by rising global yields.”

Quantitative easing in both U.S. and Japan has led to bull runs in both U.S. and Japanese equity markets, with S&P 500 (Indexsp:INX) and NIKKEI 225 (Indexnikkei:Ni225) closing at record highs.

Not only does Norway generate money from taxes on oil and gas which is Europe’s largest producer, it also owns petroleum fields as well receiving dividends from its 67 percent stake in Statoil ASA (ADR) (NYSE:STO).