The world’s largest sovereign wealth fund is opening up its long/short equity hedge funds allocations to external asset managers for the first time.
Norges Bank Investment Management, which manages the assets of the 19.65 Norwegian kroner ($1.75 trillion) Government Pension Fund Global, Oslo, has been running these strategies in-house for many years, said Erik Hilde, global head of external strategies, in an email.
NBIM is now expanding that approach to include external managers since "the market for active management is evolving, with an increasing number of long/short strategies among the smaller, privately owned firms where we look for external managers," Hilde said. "Expanding our external mandates allows us to further utilize this expertise and seek additional sources of return."
NBIM is evaluating long/short equity strategies in Europe and the U.S., with the aim of making initial allocations of about $250 million to each selected manager.
The exposure sits within the sovereign wealth fund’s equities allocation. It had a 71.4% allocation to equities as of Dec. 31.
Executives have no plans to expand into broader alternative strategies, beyond long/short equity, Hilde added.
The wealth fund had 994 billion kroner, equal to about 5% of its assets, under external management as of Dec. 31.
