SWEDEN - The Swedish buffer fund Första AP-Fonden, or AP1, has awarded emerging markets mandates to six of the 12 managers it named a year ago.
The managers gaining assets include Merrill Lynch Investment Managers, Alliance Capital, Emerging Markets Management, Aberdeen Asset Management, Panagora and Marvin Palmer (see mandate sizes below).
They were chosen from a pool the fund named last year as possible candidates to take over an SEK8.6bn (€944m) UBS passive mandate.
Managers without assets so far include Brandes Investment Partners, Capital International, Citigroup Asset Management, Lazard Asset Management, Vontobel Asset Management and
Barclays Global Investors.
“We have chosen what we think is the best selection for us for the moment,” said AP1 spokeswoman Nadine Viel Lamare. “Which does not mean that we will not fund the others but nothing has been decided yet. We do not want to split the portfolio into too many mandates.”
The fund made a 0.2% return on investments in the first half, with assets rising to SEK188.2bn.
Some 98% of its funds under management were placed under active or enhanced management with 35% managed externally.
The first half of 2006 also saw the completion of the procurement of three private equity managers: LGT Capital Partners (Europe), WP Global Partners (North America) and Pacific Corporate Group (global). “Funding of these mandates will begin this autumn,” AP1 stated in its half-year report.
Alternative investments, where private equity is a key component, returned 21.8% (SEK0.9bn). This result saved the overall return from dropping to -0.3%.
AP1 attributed this partly to the fund’s investment in Cevian Capital 1. It also announced that it would invest in the Cevian 2 hedge fund acquiring ownership holdings in listed Nordic companies. In a first step allocation to alternative investments will be increased to the set benchmark of 3%, Viel Lamare says.
“In the very, very long run we could maybe think about allocating 10% of the portfolio but that is very, very long run.”
Swedish law does not allow pension funds to invest more than 5% of alternative investments in private equity, so AP1 would have to look to other alternative investments. These could be non-Swedish property or hedge funds but nothing is decided yet, IPE was told.
The overall portfolio composition remained largely the same compared to 2005 with 59% equities, 31% fixed income and 2% alternatives.
Emerging markets mandates:
Merrill Lynch - SEK3.4bn (passive)
Alliance Capital - SEK1.6bn (active)
Emerging Markets Management - SEK1.5bn (active)
Aberdeen - SEK1.4bn (active)
Panagora - SEK466m (active)
Marvin Palmer - SEK282m (active)