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U.S. Treasurys, as it seeks greater returns elsewhere.  The rebalancing of its portfolio would add other types of U.S. bonds and other assets such as mortgage-backed securities. The $2.3 trillion fund has made record profits recently on its equity holdings, but is heavily exposed to tech and AI.           Nicolai Tangen, chief executive officer of Norges Bank Investment Management, at the Arendalsuka conference in Arendal, Norway, on Wednesday, Aug. 13, 2025.  Carina Johenson | Bloomberg | Getty Images    Norway's sovereign wealth fund has proposed cutting the allocation of government bonds in its $2.3 trillion investment portfolio, chiefly affecting its holdings of U.S. Treasurys, as it seeks to diversify its risk exposure and boost returns.  The heads of Norges Bank Investment Management (https://www.nbim.no/en/news-and-insights/submissions-to-ministry/2026/the-government-pension-fund-global--analyses-and-assessments-of-the-investment-strategy-for-bonds/) wrote in a letter to the country's Finance Ministry, made public Friday, that it recommended reducing the government subindex of its bond holdings from 70% to 50% — a level it said would provide sufficient liquidity during market turbulence while allowing it to seek greater returns elsewhere.  The proposed reallocation would gradually cut NBIM's Treasury holdings from 34.1% to 21.9%, reduce its euro area holdings from 16.8% to 14.1%, and increase its share of Japanese government bonds to 7.4% from 4.6%.  NBIM also wants to begin weighting its government bond holdings by market value instead of gross domestic product because of the high debt loads of almost all developed economies,    Treasurys under pressure  The potential shift would come at a sensitive time for the Treasury market, with (https://www.cnbc.com/2026/08/18/treasury-yields-.html) long-dated yields pushed to decade-highs as investors fret over the U.S. fiscal trajectory and (https://www.cnbc.com/2026/08/19/us-government-debt-passes-40-trillion-mark-for-the-first-time.html) increasingly heavy debt load .  "Reliable buyers and holders of U.S. Treasurys are under pressure," economist Mohamed El-Erian told CNBC's Carolin Roth in a Friday interview, citing Japan, China and Gulf countries. Addressing NBIM's proposal to reduce its own share of Treasurys, El-Erian said, "The size isn't big, but the signal that traditional holders and buyers are becoming less reliable is a very important one."   (NBIM CEO: Record half-year gains are 'really concentrated' in tech)   watch now      VIDEO 8:44 08:44  NBIM CEO: Record half-year gains are 'really concentrated' in tech (https://www.cnbc.com/squawk-box-europe/) Squawk Box Europe        NBIM plans to increase its holdings of nongovernment U.S. fixed income, such as corporate bonds, to 27.6% from 16.2%. CEO Nicolai Tangen and Norway's central bank chief, Ida Wolden Bache, said the fund could earn higher premiums by diversifying into riskier assets, such as mortgage-backed securities, which they judge as well positioned to weather as a long-term investor. Tangen and Wolden Bache said mortgage-backed securities, made (https://www.cnbc.com/2018/09/12/financial-crisis-a-decade-ago-made-mortgage-sector-stronger-says-exec.html) infamous during the 2008 financial crisis , tend to move in the opposite direction to equities during crises and so could provide an "additional reduction of volatility" more similar to government bonds than corporate bonds.  NBIM currently holds around $1.65 trillion in equities — with ownership of almost 1.5% of all shares in the world's listed companies — and $592 billion in fixed income. The fund, established in 1998 to invest revenues from Norwegian oil with strict guardrails to preserve its longevity, has (https://www.cnbc.com/2026/08/12/norway-sovereign-wealth-fund-spacex-nvidia-apple-nbim.html) made record profits in recent quarters from its huge investments in U.S. and Asian tech firms and beneficiaries of the artificial intelligence boom, such as semiconductor stocks. However, Tangen has (https://www.cnbc.com/2026/08/12/norway-sovereign-wealth-tangen-nbim.html) warned that those levels of returns will not be sustainable in the case of a market downturn. In the first quarter of 2025, it (https://www.cnbc.com/2025/04/24/worlds-largest-sovereign-wealth-fund-reports-40-billion-loss-in-first-quarter-on-tech-downturn.html) swung to a $40 billion loss as investors turned risk-off. A recent stress test by NBIM found that an AI correction could wipe $740 billion, or 35%, off its value.    (https://www.google.com/preferences/source?q=https://www.cnbc.com/) Choose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.                      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