(Bloomberg) -- Norway’s sovereign wealth fund, the world’s biggest, wants to allocate a larger chunk of its $1.3 trillion portfolio to external asset managers, describing their performance so far as “fantastic.”

The Oslo-based investor already raised its allocation target for external asset managers at the end of last year, bringing it to 5% from just under 4%. It will now “increase that somewhat,” up to 6%, according to Trond Grande, the fund’s deputy chief executive officer.

The model applies mostly to the fund’s equity portfolio in emerging markets, and means that as much as $80 billion will be handled by outside asset managers.

“As long as the strategy is to use this to manage equities in emerging markets, there are also limitations on the size of these markets,” Grande said in an interview on Wednesday. “Emerging markets account for about 10% of the equity portfolio, so there are some natural limitations as long as the strategy is what it is.”

Strategy Shift

Grande spoke after the fund unveiled a strategy update in which it said its goal was to “emphasize specific, delegated active strategies and have less emphasis on allocation or top-down strategies.”

The shift in focus comes as institutional investors everywhere are trying to gauge the likelihood of a sudden return of inflation that might upend their portfolio strategies.

Nicolai Tangen, a former hedge-fund manager who’s been CEO of Norway’s wealth fund since September, said the potential resurgence of inflation could “derail” the current market. Figuring out when such a correction might come is “something we look at a lot internally,” he said.

Things have “gone very well for a very long time,” he said. “But there’s risk in these markets. Interest rates are low and inflation is currently low. The market has risen a lot, despite the fact that earnings in many sectors have actually fallen during the crisis. There are no cheap sales out there in stocks.”

Tangen has tried to prepare the wealth fund for any sudden bouts of volatility, which has included exposing his portfolio managers to some of the training techniques that help drive top athletes. He says the idea is to ensure they’re able to deal with extreme stress without making bad investment decisions.

Part of the fund’s risk management will include stepping up research on so-called negative selection, which includes techniques such as forensic accounting. “Our aim is to expand our negative selection by underweighting stocks we expect to underperform,” it said.

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