Norway wealth fund boosts US Treasury holdings despite government debt concerns

By Gwladys Fouche

OSLO, Jan 29 (Reuters) – Norway’s $2.2 trillion wealth fund, the world’s largest, has maintained its appetite for U.S. Treasury bonds even though it has concerns about high government debt levels in the U.S. and elsewhere, as it follows its investment mandate.

The fund is responsible for investing the Norwegian state’s revenues from oil and gas production in bonds, stocks, property and unlisted renewable energy projects outside its home country.

Some big Northern European investors are wary of the risks of holding U.S. assets in the face of geopolitical tensions, pension chiefs told Reuters last week, a sign of a broadening shift away from the world’s biggest financial market.

Sweden’s Alecta and Denmark’s AkademikerPension, meanwhile, said they had sold or were in the process of selling their U.S. Treasuries.

But the value of the Norwegian fund’s U.S. Treasury holdings increased during the second half of 2025 to $199 billion, or 9.4% of its total investments, as of December 31, continuing a long-term trend, fund data released late on Wednesday showed.

That compares with the $181 billion the fund held in U.S. Treasuries, or 9.2% of its total investments, at June 30.

The fund, which has seen significant inflows over the past four years, mostly from its stock holdings, must respect a finance ministry rule that around 70% of the fund’s value must be in stocks and close to 30% in bonds, Tronde Grande, its deputy CEO said.

“We have this rebalancing rule, which means that almost all of this (inflow), or most of it, has been invested in fixed income,” he told Reuters.

HIGH GOVERNMENT DEBT LEVELS

At the same time, fund officials reiterated their concerns about high government debt levels, in the U.S. and other countries.

“High sovereign debt levels are generally negative. But it’s not only the U.S. who’s got high debt levels. You have very many countries and the IMF is talking about this,” fund CEO Nicolai Tangen told Reuters.

“It’s high in absolute numbers and it’s high in percent of GDP.”

Annual stress tests the fund released on Thursday showed that in a scenario where there was a regional debt crisis, the fund could lose 32% of its total value.

Asked whether he was comfortable with the fund’s exposure to U.S. debt, and U.S. assets in general, Tangen said: “We are invested according to a mandate which is set by the ministry of finance, and so we are generally happy with the mandate.”

Overall, the value of U.S. Treasuries the fund held over the past five years has increased.

In 2021, they made up 6.9% of the fund’s total investments and were worth $100 billion; in 2022, 8% ($104 billion); in 2023, 8.4% ($132 billion); and in 2024, 8.7% ($158 billion).

Overall, 52.9% of the fund’s assets were invested in the U.S. at the end of 2025, across equities, bonds and property, compared with a share of 52.4% six months earlier, data showed.

FRAGMENTATION OF WORLD ECONOMY IS BIGGEST RISK

Overall, the biggest risk to the fund was the fragmentation of the world economy, leading to lower levels of international trade, Tangen said.

“You did see some signs of that when you had the introduction of tariffs in the spring of last year. You saw the market situation, right? That was a fragmentation-type situation,” said Tangen.

Based on the fund’s latest stress tests, that risk could lead to a 37% drop in the fund’s overall value.

Another stress test showed an AI correction could lead to a 35% drop in the fund’s total value. The same scenario last year showed a drop of 18%, reflecting the bigger share taken by AI stocks in the fund’s portfolio.

$247 BILLION PROFIT IN 2025

The fund reported a 2025 profit of 2.36 trillion crowns ($247 billion), driven by a rise in tech, financial and basic materials stocks, falling just short of its 2024 record of 2.51 trillion crowns.

Its return on investment in 2025 was 15.1%, or 0.28 percentage points lower than the return on its benchmark index, set by the country’s finance ministry.

($1 = 9.5476 Norwegian crowns)

(Reporting by Gwladys Fouche, editing by Terje Solsvik, Stine Jacobsen and Jane Merriman)