Specialised external mandates

NBIM has over time increased the proportion of specialised country and sector mandates, particularly in small and medium-sized markets where having a local presence is an advantage. Of the 14 specialist mandates awarded in 2010, eight were in specific markets, including Greece, Spain, Italy and Sweden, and six were for
specific sectors, such as environmental investments. Nineteen of the 26 mandates ended in 2010 were held by large management organisations with broad product ranges.

The fund had 283 billion kroner in assets under external management at the end of 2010. That is equal to 9.2 percent of the fund’s total market value, compared with 12 percent in 2009. A total of 62 external mandates were managed by 45 different organisations, 59 of which were equity mandates.

External equity mandates

NBIM awards external equity mandates in markets and segments where it is not expedient to build internal expertise. Many of the external mandates are in market
segments where the potential to generate an excess return is considerable. This particularly applies to small and medium-sized companies and emerging markets.

NBIM will award mandates in the geographical area where a manager is based or in an industry where a manager has particular expertise. Managers seek to generate an excess return through fundamental analysis of individual companies within a focused and concentrated investment mandate. Managers apply considerable analytical capacity to a limited number of equities in their specialist field.

External fixed-income mandates

External fixed-income management has been scaled back and restructured in recent years. All of the external fixed-income mandates that were awarded before the financial crisis and had losses in 2007 and 2008 were terminated by the end of 2010. NBIM had three fixedincome mandates with one external manager at the end of 2010.