Norway's sovereign wealth fund, which is the world’s largest sovereign wealth fund, is raising its bets on corporate bonds in its fixed income portfolio in India.

It has added two new names - Adani Ports & Special Economic Zone and Britannia Industries - show the fund’s latest disclosures. Its investments are worth around $100 million in the Adani venture and around 250,000 dollars in Britannia. The total proportion of corporate bonds in its India fixed income book was up from 5.1 per cent to 8.2 per cent as of 2019-end. Other holdings include Reliance Holding USA and Reliance Industries. The two companies account for another $95 million in debt assets.

The Indian government's debt securities account for the bulk of holdings and the fund holds instruments worth $2.16 billion. The figure was $1.96 billion last year. It also holds Export-Import Bank of India's instruments under ‘government related bonds’.

Investments in Reliance Industries have also been classified as ‘government related bonds’. A spokesperson for the fund said that it was a classification error in response to a query from Business Standard.

“Bonds denominated in dollars, euros, pounds and yen climbed from 82.6 percent to 84.6 percent of fixed-income investments. Debt instruments issued by governments and companies in countries classified as emerging markets will be limited to 5 percent of the market value of the bond portfolio going forward,” said the annual report.

Norway established its sovereign wealth fund after its oil discoveries. The fund has been created is to provide a cushion against oil price fluctuations and to help the country meet future needs. The Government Pension Fund Global invests across asset classes. This includes equities, fixed income and real estate. The fund is now worth over $1.1 trillion and nearly 70.8 per cent of it is invested in equities. Fixed income accounts for 26.5 per cent. Unlisted real estate is another 2.7 per cent.

“In the first years, returns were low, but the fund grew due to large inflows. In the past decade, the fund has had a lower inflow, but the return (was higher)…The strong return the past decade was facilitated by the equity purchase…during the financial crisis. The fund is now worth more than the Norwegian people’s combined net wealth and three times the country’s GDP. We now have wealth invested in the world’s financial markets that exceeds the government’s total oil revenue over the past 50 years,” noted the latest annual report.

Instruments which are no longer in the fixed income portfolio of the fund include REC and Power Finance Corporation.