Arnt Brandseth
The fund is overseen by Norges Bank Investment Management (NBIM), a branch of the Norwegian central bank established in the 1990s to invest the country's oil and gas earnings. It comprises 1.5% of all publicly listed firms globally, valued at around $1.65 trillion, and has $592 billion in debt securities.
In a letter addressed to the Norwegian Ministry of Finance, management at NBIM suggested lowering the proportion of government bonds in its bond portfolio from 70% to 50%. NBIM is confident that this will be adequate to sustain liquidity during times of market volatility and will enable it to identify assets with higher yields.
The portion of US Treasury bonds in NBIM's portfolio is anticipated to slowly decline from 34.1% to 21.9%. Concurrently, the portion of US non-government debt will rise from 16.2% to 27.6%. The proportion of EU bonds will fall from 16.8% to 14.1%, while the proportion of Japanese government bonds will rise from 4.6% to 7.4%. NBIM intends to start assessing the proportion of government bonds in its portfolio using their market value instead of GDP, as nearly all advanced economies carry substantial public debt.
According to CEO Nicolai Tangen and Bank of Norway Governor Ida Wolden Bache, the fund can attain greater returns by investing in more volatile assets. For instance, securities backed by mortgages. As per Tangen and Bache, these are safeguarded against long-term risks. These securities typically exhibit contrary movements to stocks in times of crisis, leading officials to believe they will further decrease volatility.
source: cnbc.com
In a letter addressed to the Norwegian Ministry of Finance, management at NBIM suggested lowering the proportion of government bonds in its bond portfolio from 70% to 50%. NBIM is confident that this will be adequate to sustain liquidity during times of market volatility and will enable it to identify assets with higher yields.
The portion of US Treasury bonds in NBIM's portfolio is anticipated to slowly decline from 34.1% to 21.9%. Concurrently, the portion of US non-government debt will rise from 16.2% to 27.6%. The proportion of EU bonds will fall from 16.8% to 14.1%, while the proportion of Japanese government bonds will rise from 4.6% to 7.4%. NBIM intends to start assessing the proportion of government bonds in its portfolio using their market value instead of GDP, as nearly all advanced economies carry substantial public debt.
According to CEO Nicolai Tangen and Bank of Norway Governor Ida Wolden Bache, the fund can attain greater returns by investing in more volatile assets. For instance, securities backed by mortgages. As per Tangen and Bache, these are safeguarded against long-term risks. These securities typically exhibit contrary movements to stocks in times of crisis, leading officials to believe they will further decrease volatility.
source: cnbc.com