“Norges Bank Investment Management said in a letter to the country’s finance ministry on Tuesday that it recommended reducing the weighting of government debt in the fund’s benchmark bond index from 70 per cent to 50 per cent.

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A lower Treasury allocation for Norway’s Government Pension Fund Global would be offset by purchases of riskier fixed-income products, particularly debt such as mortgage-backed securities.

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These MBS are largely backed by government agencies, meaning Norway’s exposure to the risk of a US government default is only being reduced modestly. They do, however, offer slightly higher yields than Treasuries because of the risk that mortgages are repaid early” [1].

[1] https://www.ft.com/content/ecc15aa6-6e7b-409d-8753-2fb6aadd0...