Oslo-based Government Pension Fund Global is boosting the amount external managers can run up to 5% of the fund's assets, equivalent to 545 billion Norwegian kroner ($59.4 billion), starting next year, according to a speech by Jon Nicolaisen, deputy governor of Norges Bank.
As of Dec. 31, external managers ran 3.9% of assets or 389 billion Norwegian kroner for the sovereign wealth fund, according to its website. The fund had 10.9 trillion Norwegian kroner in assets as of Nov. 20. Assets in the hands of external managers were run in 83 allocations by 74 money managers, including 66 country-specific investments in emerging and frontier equity markets and 17 country-specific allocations to developed market small-cap funds.
The fund greatly benefits from the use of external managers when it comes to emerging market investments, Mr. Nicolaisen said in his speech Thursday. From 1998 to 2019, cumulative excess return after costs associated with external mandates was 48 billion Norwegian kroner, exceeding the fund's expectations and fees paid for services. The managers helped the fund spread risk across markets and steered away from companies with weak ownership structures, Mr. Nicolaisen said.