Norwegian wealth fund spares sterling in major bond cull

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Sterling denominated bonds have survived a major cull of currencies from the Norwegian sovereign wealth fund’s fixed income portfolio.

The $990bn fund, the world’s largest, is planning to cut 20 currencies from its portfolio, leaving only bonds in US dollars, euros and sterling, Reuters reports.

The central bank has written to the finance ministry asking for permission to make the changes arguing it would reduce transaction costs and volatility, while having little impact on overall risk.

It would not immediately sell assets, but gradually move away from its current benchmark, which includes bonds denominated in Japanese yen and Swiss francs among other currencies.

Government bonds represented the fund’s entire holdings in the 1990s, but have been cut to 32 per cent to make more room for equities.