Norges Bank Investment Management (NBIM), which manages Norway’s $1.6tn sovereign wealth fund, is expanding its hedge fund programme by awarding new mandates to external long-short equity managers across Asia, Europe, and the US, according to a report by Top1000Funds.
The move, part of a broader diversification strategy, will target both single-country and regional long-short strategies, with initial allocations ranging from $150m to $500m per manager. The number of managers and overall investment size will depend on market conditions, said Erik Hilde, NBIM’s global head of external strategies.
NBIM, which already runs internal long-short equity strategies and allocates around $90bn to 110 external fundamental managers, said the new mandates will remain tightly aligned to its existing risk frameworks. “Everything will continue to be managed within our mandate and within the limits we have for deviations from the index,” Hilde said, noting that fee structures will mirror those used in its current external management programme.
The strategies will be deployed via separately managed accounts, allowing managers to short securities by borrowing stocks from NBIM’s index portfolio without taking on net short positions at the portfolio level.
The sovereign fund’s open invitation to external managers is seeking particular expertise in Japanese and Australian equities, European regional strategies, and sector specialists in US healthcare and technology.
NBIM’s push into long-short equity comes amid rising market volatility, wider stock dispersion, and concerns that elevated valuations could expose long-only investors to greater downside risks — particularly as uncertainty persists over the economic impact of President Trump’s tariff policies.
Equities make up approximately 70% of NBIM’s total assets, with fixed income accounting for 27.7% and unlisted real estate 1.9%. After Norway’s finance ministry rejected the fund’s request to expand into private equity last year, citing concerns around transparency, fees and political consensus, public markets remain the focus.
NBIM delivered a 13% return in 2024, driven by strong gains across global equity markets. However, security selection detracted from relative performance for the year — the first negative contribution after five consecutive years of positive selection results. External managers outperformed, but internal strategies weighed more heavily on the overall result.
Despite recent setbacks, NBIM has posted annualised returns of 7.5% over the past decade. In the first quarter of 2025, however, the fund reported a 0.6% loss, with equities down 1.6% — a decline equivalent to $39bn — largely attributed to sharp fluctuations in the tech sector.
