SWEDEN - Första AP-fonden (AP1), the First Swedish National Pension Fund, saw the value of its assets under management fall SEK47.2bn (€4.3bn) to SEK171.6bn (€15.8bn) as a result of the global market turmoil.
Annual figures for 2008 showed the total return on investments of -21.9%, after operating expenses, resulting in an investment loss of SEK48bn which fund officials blamed on global stock market developments.
The pension buffer fund revealed its equity portfolio, equivalent to 55% of total assets at the end of 2008, returned -40.1%, equivalent to a negative absolute return of SEK-56bn return, while the fund's active position-taking produced a return of -0.69%.
In the annual report, AP1 said the quoted part of the portfolio equates to around 94.5% of fund capital, which returned -22.4%, while alternative investments - mainly real estate and venture capital funds - generated a return of -3.5%, although the fund revealed the alternative losses were mainly driven by investments in real estate shares.
That said, fixed income investments helped limit the losses with a positive return of 8.3%, or SEK5.8bn before expenses, while AP1 claimed its foreign exchange, or currency, exposure of 22% had a "positive impact" on performance as the Swedish krona weakened in 2008.
AP1 acknowledged, however, its active management failed to outperform the strategic benchmark for the first time in five years, resulting in the buffer fund's decision to change its asset management model to focus on strategic asset allocation. (See earlier IPE article: Jobs go as AP1 alters asset management model)
Johan Magnusson, managing director of AP1, said: "We are clearly not satisfied with this outcome. However, it should be seen in light of the very long-term nature of Första AP-fonden's mission.
"From a historical perspective the past year was extreme, with global equity markets plummeting by 40%, and we have naturally not emerged unscathed from this situation. We are now taking steps to analyse and make use of experiences and lessons learned from the financial crisis," added Magnusson.
All of the first four Swedish pension buffer funds have now reported losses of between 20-24% as the global economic crisis significantly impacted investments, particularly in Swedish equities. (See earlier IPE articles: AP3 reports 20% drop as diversification falls short, AP4 drops 21% in 2008 and Equity losses reduce AP2 by €5.2bn)
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