SWEDEN – The 148.1 billion-crown (16.4 billion-euro) First Swedish National Pension Fund, Första AP-fonden or AP 1, has replaced its head of fixed income, Hans Gustafson, with insurer AFA Försäkring’s Arnold Fahlén.

AP1 managing director William af Sandeberg said Fahlén, who is head of fixed income and foreign exchange at AFA Försäkring, will probably start by the end of the first quarter of 2005.

Gustafson, who has been running fixed income for over three years, will join the funds strategic asset allocation team, chaired by af Sandeberg.

Fahlén, who still works for AFA Försäkring, said the insurer had not yet chosen a successor. “I have been working AFA Försäkring for seven years. It will be interesting to work in a new place. It’s a new challenge.”

According to AP1’s most recent half-year report, the market value of the fixed income portfolio as of June 30 amounted to about 59 million crowns - over 90% of which is managed internally. Total fixed income return was 1.8%, 0.1 percentage points below benchmark.

Af Sandeberg said Fahlén’s arrival would not mean a change to the fund’s allocation to the asset class.

“While the fund’s tactical asset allocation positions made a positive contribution to the fixed income return, the effects of strategic positions were negative and the contributions from fixed income investments was neutral,” the first-half report stated.

It added that the external manager in charge of US bonds “contributed positively”.