SWEDEN - The 13.6 billion euro second Swedish national pension fund, AP2, has appointed what it calls a “network” of 13 external investment managers in 14 separate equity sectors – though no agreements about size of mandates has yet been reached.
The fund’s chief investment officer Petter Odhnoff said the appointment of the managers is an initial stage in a process of creating a network of managers. The managers’ ability to communicate with AP2 was a key criterion of the selection process. But the size of the business to be awarded is as yet undecided. “We haven’t talked to our managers about size of_mandate.”
Nothing has been finalised, though he foresees AP2 having five to 10 active mandates up and running within six months.
“One reason for choosing to work with a number of external investment managers is to secure the best expertise for a given market (whether in regional or sector terms), regardless of where they are based,” Odhnoff said. “The other reason is diversified risk taking.”
AP2 seeks a close relationship between its own internal managers and outside managers, Odhnoff said. “We do believe we will be able to generate an alpha on a total portfolio view,” he added.
Selection criteria included organisation and staff professionalism, qualitative research, style and interaction with AP2 in terms of sharing experience and ideas. Other criteria were past performance, existing client relationships, fees, risk management and compliance.
The fund posted a return on invested assets of –9.3% for the six months to the end of June 2002 – due to weaker markets. At the time, AP2’s chief executive Lars Idermark said it was vital that it stuck to its long-term management strategy of investing in equities.
The managers will oversee the 60% of AP2 assets that are handled externally.
The new managers are:
Deutsche Asset Management
Franklin Templeton Investment
Scottish Widows Singer & Friedlander