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

Norway's $2.3 trillion sovereign wealth fund—the world's largest—has proposed cutting its allocation to government bonds, a move that would primarily reduce its holdings of U.S. Treasurys. The fund aims to reallocate capital into asset classes offering higher risk and return profiles.

The proposal represents a strategic shift for the Norwegian fund, which has historically maintained significant exposure to developed-market government debt as a ballast in its massive portfolio. By reducing government bond allocations, the fund signals confidence in pursuing diversification opportunities beyond low-yielding sovereign paper.

The timing comes as Treasury yields have fluctuated amid shifting Federal Reserve policy expectations and persistent fiscal concerns. A reduction in holdings by one of the world's largest institutional investors could influence demand dynamics in the Treasury market, though the fund has not disclosed the proposed magnitude of the allocation cut or the timeline for implementation.

Norway's fund, built on the country's oil wealth, typically adjusts its strategic asset allocation infrequently, making this proposal noteworthy for fixed-income markets.