Oslo — Norway’s sovereign wealth fund proposed sweeping changes to its $333bn bond portfolio, including dropping the Japanese yen, emerging market and corporate bonds, as it beefs up on liquidity amid an expansion of its stock holdings. The $980bn fund recommended paring its bond index from 23 currencies to only include securities denominated in dollars, euros and pounds, according to a letter sent to the Norwegian Finance Ministry. Emerging market and corporate debt should be removed but "systematic strategies" should be put in place to invest in these, it said. "In the long term, the gains from broad international diversification are considerable for equities but moderate for bonds," the fund said. "For an investor with 70% of his investments in an internationally diversified equity portfolio, there is little reduction in risk to be obtained by also diversifying his bond investments across a large number of currencies." The proposal will need to be approved by the government, but ...
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