The SEK130bn (e14.6bn) Swedish government third AP-fund (AP3) has decided to put its global ex Europe investments in the hands of a number of UK and US investment managers.
Within the basic framework realised so far Merrill Lynch Investment Managers has taken up the running of a US equity portfolio, while State Street Global Advisors has been awarded a Japanese equity portfolio.
Barclays Global Investors has also picked up an as yet undisclosed portfolio.
The amounts to be placed in the new briefs have yet to be declared, because they are a part of AP3’s unpublished long-term strategic plan, but Pernilla Klein, information manager for AP3 says: “They are optimal portfolios in regard to our debt situation. Our plan is also a long term one, because our first payments are due in twenty years.”
AP3 - one of a series of buffer funds created to cover future pensions and other social payments received a SEK130bn portfolio from the Swedish government on January 1, 2001.
A third of the portfolio is exposed to equity, with a “considerable” amount in Swedish shares and the rest of it is mainly in Swedish bonds, the fund says.
Work is now under way to align the fund’s investments with its in-house index-related benchmark.
“During this transition period we can’t say anything about our strategic portfolio. It does cover Japanese and US mandates so far, but it’s going to be a broader global portfolio,” says Klein.
AP3 is expected to manage its own domestic assets, which will include Swedish fixed-income and real estate, as well its European assets.
The fund appointed Northern Trust as global securities services provider in November in a move to find a business partner who could handle global portfolios with a breadth of financial instruments - features which the new mandates comprise.
The investment regulations for the AP-funds have been loosened in the last few years to ensure higher returns and more freedom to the invesment manager