The manager of Norway's $2.4 trillion sovereign-wealth fund proposed cutting its holdings of government bonds to add riskier debt in a bid to seek greater returns.

Norges Bank Investment Management--the arm of the central bank that manages the world's largest sovereign-wealth fund, commonly known as the oil fund--said in a letter to Norway's finance ministry that the portion of its bond portfolio allocated to government debt should be cut to 50% from 70%.

The fund said a 50% share provides a comfortable margin to cover liquidity needs, even at times of market turbulence, and that holding more represents an implicit cost in the form of a lower expected return. The remaining part of the fund's bond portfolio should provide exposure to more sources of risk premiums in the bond market, it added.

Rising concerns about global government debt levels have fueled a recent global bond sell-off, pushing yields to multiyear highs around the world, while the conflict in the Middle East has added to inflation fears.

Norway's sovereign-wealth fund had a market value of 22.683 trillion Norwegian kroner ($2.441 trillion) as of June 30. Fixed income accounts for just under 26% of the overall fund's investments.