Norway's oil fund — the world's largest sovereign wealth fund — almost halved its exposure to UK and French government bonds last year while increasing it to debt from the US, Japan and Germany.
The $712 billion fund slashed its holdings of UK government debt from 110 billion kroner at the end of 2011 to 60 billion kroner at the end of December.
French bond holdings dropped from NKr80 billion to NKr44 billion over the same time period.
The oil fund — known as Norges Bank Investment Management due to its position inside Norway's central bank — enjoyed its second best year since its formation in 1998 as buoyant equity markets helped it to a return of 13.4 percent.
The credit quality of the oil fund's overall bond portfolio as measured by rating agencies soured significantly.
Its holdings of triple B bonds rose from 90 billion kroner to 224 billion kroner over the year.
The oil fund is one of the most closely watched investors in the world and is in the middle of shifting its equity and bond holdings away from Europe and towards emerging markets.
European holdings became a minority of the fund's $712 billion in assets, representing just 48 percent, down from 53 percent.
(Read More: FT: Norges Fund Plans to Take on More Risk)
(Read More: FT: Norway Oil Fund Invests $600 Million in US)
(Read More: FT: Norway Shifts to Emerging Market Bonds)
Both the fund and Norwegian government officials have justified the move away from Europe as part of an approach to make its holdings more representative of the distribution of GDP globally, rather than a snub to the continent because of the eurozone crisis.
It added bond holdings in local currencies from countries such as China, Russia, Hungary and the Philippines for the first time in 2012.
But it also increased its holdings in the US, Japan and Germany — now its three biggest government bond investments — despite the avowed distaste of Yngve Slyngstad, chief executive, for quantitative easing's effects on debt investors.
Equities, which account for about 61 percent of the fund's total, returned 18 per cent while bonds earned 6.7 per cent. The fund's biggest shareholdings included Nestle, Royal Dutch Shell, HSBC, Novartis and Apple.
Its nascent property portfolio — which accounts for just 0.7 per cent of assets — returned 5.8 percent last year. NBIM has more than tripled its property holdings in the past year, buying up real estate in the US, Zurich, Berlin and Sheffield.
The oil fund has been grappling with how to use its immense size and steady inflows from Norway's petroleum revenues to try to outperform markets by taking a longer-term approach.
The relative outperformance of its equity and bond investments last year over its benchmarks was 0.2 per cent, just below its average since inception of 0.3 per cent.
The fund increased in size by 504 billion kroner in 2012, with 276 billion kroner coming from oil revenues.