SWEDEN - Första AP-fonden (AP1), the first Swedish national pension fund, is seeking both passive and active US small cap equity managers for a total portfolio valued at $500m (€351.7m).
AP1, which currently has SEK201.8bn of assets, revealed it plans to sign agreements with "several suitable managers", but warned some of the appointed managers might remain unfunded for an "unspecified amount of time", or even for the whole of the contract.
Both the passive and active equity accounts are likely to be benchmarked against the Russell 2000 (core, growth or value) indices, and although the pension fund claimed that only 100% net long strategies would be considered, it admitted some shorting, such as 130/30 funds and similar strategies, "may be accepted".
AP1 revealed applicants would be separately evaluated for their investment management capabilities in passive/enhanced and active US small cap equity strategies, and highlighted a preference for separate accounts, although "commingled vehicles may also be considered on this occasion".
The search for new US small cap managers follows confirmation from AP1 in its interim results last week that it intends to increase its equity allocation, despite first half losses of 8%. (See earlier IPE article: AP1 to increase equities despite 8% loss)
The scheme, one of four buffer funds for the Swedish national pension system, currently has a target asset allocation of 61% in equities, although at the end of June 2008 it was below target at 58.4%, while fixed income assets equated to 37.1% of the portfolio.
In addition, while the pension fund has over 3% allocated to alternative assets, Johan Magnusson, managing director of AP1, stated in the interim results it is hoped the government may review and revise the rules governing the scheme's investments to make them less restrictive in an effort to increase returns.
The deadline for submissions to tender process closes on 24 October 2008, and contract/s are scheduled to begin on 1 June 2009.
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