The NKr800m (€101m) Larvik Primary Fund, the fund established to support the city of Larvik’s local economy has awarded two active segregated balanced mandates to Den Norske Bank Asset Management (DNB) and Pareto Asset Management.
The remainder of the fund will be invested in international mutual funds.
Tor Sydnes of Wassum Investment Consulting in Bergen, which advised the fund on the manager searches, comments: “DNB were chosen because of their strong local reputation and good historic track record.
“Pareto, with their absolute return strategy, were chosen to bring a fresh dimension to a traditional equity and bond strategy, but without using alternatives or hedge funds,” he says.
The two balanced mandates will be equal in size at NKr 200m and split between 40% domestic equities and 60% fixed interest, of which 20% will be invested in Norway.
“This domestic only strategy may change in the future as Larvik gains experience. The trend will almost certainly then be to invest more outside Norway,” comments Sydnes.
There is no active mandate for the global funds, Larvik having bought shares directly in mutual funds. “There is no public information available for this part of the fund, except that there is an international bond fund in Norway and two further value added funds based in the US and Europe,” says Sydnes.
Larvik has not selected a global custodian, with each manager responsible for their own portion of the fund.
The fund is expected to grow to NKr1.4bn in October following the sale of a hydroelectric power plant, with Wassum continuing its role as adviser on manager and fund selection and investment strategy.