NORWAY’S sovereign wealth fund has dumped its Irish and Portuguese government bonds and moved into those of emerging markets instead.
The fund, which also voted against Greece’s debt swap earlier this year, also reduced its holdings in Italy and Spain as part of a broader strategy to cut its exposure to European investments, according to the Bloomberg news agency.
The €432bn Government Pension Fund Global said that its total holdings of Portuguese, Italian, Irish, Greek and Spanish government bonds are now below €6bn, down from nearly €12bn at the end of 2010.
The fund returned €7.1bn in the first quarter.
“Predictability is important for a long-term investor and the euro-area faces considerable structural and monetary challenges,” Norges Bank Investment Management Chief Executive Officer Yngve Slyngstad said.
The fund switched over to government bonds from emerging markets like Brazil, Mexico and India instead.
Stock markets have rallied in the first quarter of the year amidst $1 trillion in funding from the European Central Bank although investors have been more sceptical recently on fears for the Spanish and Italian economies.
Ireland is expected to return to the open bond markets to borrow next year.
Already, those calling for a ‘yes’ vote in the fiscal compact treaty have said a vote against it could make it more difficult to return to the markets.