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Norway’s sovereign wealth fund shifts from Treasuries into MBS
NBIM oversees about $2.3 trillion and said its stress testing shows an AI-led tech correction could wipe out up to $740 billion, or about 35% of the fund’s equity value.
Mortgage-backed securities are drawing more interest after Norges Bank Investment Management (NBIM), the manager of Norway’s roughly $2.3 trillion sovereign wealth fund, proposed cutting its government bond allocation and rotating into mortgage-backed securities. The shift would mean trimming largely U.S. Treasury exposure, a move that highlights sovereign diversification away from U.S. government debt amid widening fiscal deficits, according to ETF Trends.
ETF Trends also points to current market conditions that could support MBS performance, citing stabilizing rates, a steepening yield curve, and structural demand from government-sponsored enterprises. TMX VettaFi Senior Industry Analyst Kirsten Chang said those factors should keep tailwinds behind mortgage bonds in place.
The article notes that the decision was not made overnight, given lingering efforts to address the sector’s post-2008 reputation. It describes MBS as a potential diversifier that can offer yield premiums versus Treasuries and historically provides negative correlation to equities during periods of heavy market volatility.
For investors looking to access similar exposure, ETF Trends says U.S. agency mortgage-backed securities can be gained through an ETF wrapper. It names iShares MBS ETF (MBB) as the largest vehicle in the category by assets under management.