The World’s Biggest Wealth Fund Has $215 Billion In US Treasurys. It Wants To Cut Back.

Norway's $2.3 trillion sovereign wealth fund wants to sharply reduce its holdings of U.S. Treasurys as part of a wider overhaul of its bond portfolio, shifting more money toward corporate debt, mortgage-backed securities and other assets offering higher returns.

Norges Bank Investment Management, which runs the world's largest sovereign wealth fund, recommended reducing government bonds to 50% of its benchmark bond index from 70%. The change would gradually lower U.S. Treasurys from 34.1% to 21.9% of the fixed-income benchmark, while euro-area government bonds would fall from 16.8% to 14.1%, according to the fund's recommendation to Norway's Ministry of Finance.

The fund held about $215 billion in U.S. government debt at the end of June. The proposed rebalancing would substantially reduce that position, although the fund would remain heavily invested in U.S. assets because money shifted out of Treasurys would partly move into other American fixed-income securities, CNBC reported Friday.

The recommendation follows a difficult stretch for government bond markets. Long-term borrowing costs have climbed across major economies as investors contend with higher inflation, large government borrowing needs and elevated interest rates. Oil prices driven higher by the Middle East conflict have added to inflation pressures, while long-dated U.S. Treasury yields have recently traded around their highest levels in years, Reuters noted.

U.S. government finances have also been under scrutiny after federal debt crossed $40 trillion for the first time in August. More than $32 trillion of that was debt held by the public, while federal interest costs have climbed above $1 trillion annually, according to Reuters, citing Treasury Department figures.

NBIM's proposal is not a broad retreat from U.S. assets. The fund wants to increase nongovernment U.S. fixed income to 27.6% from 16.2%, including corporate bonds and mortgage-backed securities. CEO Nicolai Tangen and Norges Bank Governor Ida Wolden Bache said in the recommendation that a 50% government-bond allocation would still provide sufficient liquidity in periods of market stress while giving the fund greater exposure to credit premiums.

The managers also recommended changing how government bonds are weighted. The current benchmark uses gross domestic product to determine country weights, while NBIM wants to move to market-value weighting. It said the change would make the benchmark easier to follow and better reflect developments in global bond markets.

Norway's fund has considerably more money invested in stocks than bonds. Its half-year results showed equities accounted for 72.1% of investments at the end of June, compared with 25.8% in fixed income. The fund returned 9.4% during the first half of 2026, generating 1.753 trillion kroner in investment returns, with technology, telecommunications and energy stocks among the strongest contributors.

The changing bond strategy follows other moves by the Norwegian fund to broaden its investment exposure. As International Business Times reported Thursday, the fund disclosed a 0.05% stake in Elon Musk's SpaceX valued at about $1.22 billion as of June 30. Its much larger technology holdings included roughly $62 billion in Nvidia, $52 billion in Apple and $50 billion in Alphabet.

Those technology holdings have also increased the fund's concentration risk. NBIM recently estimated that a severe reversal in AI-related valuations could cut the fund's value by 35%, or roughly $740 billion, CNBC reported, citing the fund's stress testing.

The bond recommendations are now with Norway's Finance Ministry. NBIM said any transition to a new benchmark should take place gradually to limit transaction costs, while its proposed government-bond allocation would remain large enough to provide liquidity during periods of market turmoil.