Norway Wealth Fund to allocate more funds to outside firms

[OSLO] Norway's sovereign wealth fund, the world's biggest, plans to allocate more of its money to external managers and to increase its exposure to small caps.

Norges Bank Investment Management, which added BNY Mellon Investment and Pioneer Investments to its roster of outside managers in 2016, will boost the proportion of its funds run by external firms to 6 per cent in coming years from about 4 per cent now, Chief Executive Officer Yngve Slyngstad said in an interview. He's responsible for the US$900 billion Government Pension Fund Global, which manages Norway's oil wealth.

"We will increase our investments with external managers, not first of all in emerging markets but in small cap mandates," Mr Slyngstad said after the presentation of the fund's 2016 annual report in Oslo. "We expect to have considerably more small cap mandates around the world three years from now." The fund made 447 billion kroner(S$75 billion) last year after a stock-market rally and as it plowed deeper into emerging and frontier markets. Still, some of its costs increased amid a slide in the krone.

BNY, a unit of Bank of New York Mellon Corp, and Pioneer, which is being taken over by Amundi SA, were also joined by firms including All Weather Capital and Trigon Asset Management as new managers to run equities, according to the annual report. TRG Management was added in fixed income. All told, outside managers looked after 336 billion kroner of the fund's cash as of the end of 2016.

BLOOMBERG