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Investing with external managers
The 20 year reviewNBIM Talk, 16 April 2020
Norges Bank Investment Management
2
The mandates
3
0
10
20
30
40
50
60
70
80
90
100
0
10
20
30
40
50
60
70
80
90
100
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Regional Sector Small-cap Emerging Environmental
Number of mandates by mandate strategy
4
Market value of mandates since inception. Billion kroner
0
50
100
150
200
250
300
350
400
450
0
50
100
150
200
250
300
350
400
450
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Regional Sector Small-cap Emerging Environmental
5
Number of mandates by type of organisation
0
10
20
30
40
50
60
70
80
90
100
0
10
20
30
40
50
60
70
80
90
100
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Insurance/Bank owned managers Partnership/Private companiesPublic asset management companies
6
Number of mandates by size of organisation
0
10
20
30
40
50
60
70
80
90
100
0
10
20
30
40
50
60
70
80
90
100
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Large MidSize Small
7
Mexico City, Mexico
Bogota, Colombia
Santiago, Chile
Sao Paulo, BrazilRio de Janeiro, Brazil
Cape Town, South AfricaJohannesburg, South Africa
Nairobi, Kenya
Mumbai, India
Colombo, Sri Lanka
Jakarta, Indonesia
Sydney, Australia
Wellington, New Zealand
Kuala Lumpur, Malaysia
Dhaka, Bangladesh Ho Chi Minh,
Vietnam
Manila, Philippines
Shanghai, China
Hong Kong, China SAR
Tokyo, JapanSeoul, South KoreaBeijing, China
Dubai, UAERiyadh, Saudi Arabia
Cairo, EgyptTel Aviv, IsraelCasablanca, Morocco
Athens, GreeceIstanbul, Turkey
Milan, Italy
Madrid, SpainBarcelona, Spain
Paris, FranceLondon, UK Warsaw, Poland
Tallinn, EstoniaMoscow, Russia
Stockholm, Sweden
Bangkok, Thailand
Oslo, Norway
Edinburgh, UKAmsterdam, Netherlands
Geneva, SwitzerlandBoston, US
Budapest, Hungary
Frankfurt, Germany
Lima, Peru
San Fransisco, USSan Matteo, USLos Angeles, US
New York, USBaltimore, US
Dallas, US
Denver, US
Toronto, Canada
8
9
The managers
10
11
12
13
0
50
100
150
200
250
300
0
50
100
150
200
250
300
2012 2013 2014 2015 2016 2017 2018
Americas Asia Europe Middle East / Africa
Meetings with new fund managers by region
14
Share of assets of terminated mandates by reason of termination. Total since inception. Percent of total
0
5
10
15
20
25
30
35
40
0
5
10
15
20
25
30
35
40
Strategy change,Norges BankInvestment
Management
Lack of confidence Left business Promoted Org. development
15
Average number of companies in the portfolio
0
20
40
60
80
100
120
0
20
40
60
80
100
120
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Regional Sector Small-cap Emerging Environmental
16
Average share of managers’ top 10 holdings. Percent
0
20
40
60
80
100
0
20
40
60
80
100
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Regional Sector Small-cap Emerging Environmental
17
Corruption risk (x-axis) and relative return in percent. 0 is highest risk and 10 is lowest risk
Country
-10
-5
0
5
10
15
-10
-5
0
5
10
15
0 1 2 3 4 5 6 7 8 9 10
18
19
The results
20
External active equity. Relative return in percent, annualized (left-hand axis). Information ratio (right-hand axis).
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Full period (99 - 18) 1999 - 2003 2004 - 2008 2014 - 2018
Relative return
2009 - 2013
Information ratio
21
Relative return and tracking error in percent, annualized (left-hand axis). Information ratio (right-hand axis).
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
0.0
1.0
2.0
3.0
4.0
5.0
6.0
Externalstrategies
Regional Sector Emerging Small-cap Environmental
Relative return Tracking error Information ratio
22
Information ratio annualized (y-axis) and months as manager (x-axis). Bubble sizes indicates size of mandate
-3
-2
-1
0
1
2
3
-3
-2
-1
0
1
2
3
0 20 40 60 80 100 120 140 160 180
Active Terminated
23
Time-weighted and equal-weighted excess return. Percent
-2
-1
0
1
2
3
4
5
6
-2
-1
0
1
2
3
4
5
6
Externalstrategies
Regional Sector Emerging Small-cap Environmental
Time weighted Equal weighted
24
Information ratio with 95 percent confidence intervals
-0.6
-0.4
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
-0.6
-0.4
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
All
man
date
s
Reg
iona
l
Sect
or
Emer
ging
Smal
l-cap
Envi
ronm
enta
l
25
Relative return by mandate strategy. Billion kroner
-15
-5
5
15
25
35
45
55
65
-15
-5
5
15
25
35
45
55
65
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Regional Sector Small-cap Emerging Environmental
26
Cumulative excess return and fees. Billion kroner
-15
-5
5
15
25
35
45
55
65
-15
-5
5
15
25
35
45
55
65
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Regional Sector Small-cap Emerging Environmental
27
Management fees and relative return by mandatevintage. Million kroner
-4,000
-2,000
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
-4,000
-2,000
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Relative return Fees paid
28
29
30
31
MissionSafeguard and buildfinancial wealth for future generations
NBIM Talk, 16 April 2020
Investing with external managers
The 20 year review
Norges Bank Investment Management
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