Norway pension fund plans big changes for bond portfolio
Norway’s US$990bn sovereign wealth fund, the world’s largest, plans radical changes to its fixed income portfolio by cutting corporate and emerging market bonds from the benchmark index it uses, and shortening maturities.
If approved by Norway’s finance ministry, the changes will leave only government bonds in US dollars, euros and British pounds as part of the benchmark, compared with 23 currencies currently. The fund said they are the three most liquid currencies.
Norges Bank Investment Management, which manages the fund on behalf of Norway’s central bank, said the changes will cut transaction costs and volatility. It would have little impact on overall risk and should improve liquidity, it said in a letter to the ministry released on Monday.
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