SWEDEN - Andra AP-fonden (AP2), the Second Swedish National Pension Fund, has managed to undo some of the losses from last year as active in-house management of certain investments helped generated a first half return of 6.4% on its portfolio.

The pension scheme, one of the Swedish buffer funds, attributed the positive performance to its continuing high allocation to equities in the fund's portfolio, especially in terms of the Swedish market.

AP2 noted in the first six months of 2009 it had participated in a number of new share issuances on the Swedish equity market, equivalent to contributing around SEK700m (€69.4m) to Swedish companies, and claimed these investments had a "positive impact on both total and relative return".

The return of 6.4%, excluding costs, is a significant improvement to the -9.1% result in the first half of 2008, as the fund posted a profit of SEK 10.9bn and the value of its assets increased to SEK 182.5bn (€18bn) by the end of June, from SEK 173.3bn at the end of December last year. (See earlier IPE articles: Equity losses reduce AP2 by €5.2bn and Swedish buffer fund loses €2.2bn in H1)

Figures from the interim statement showed the asset allocation of the fund at the end of June 2009 comprised 34% of assets in non-Swedish equities and 18% in Swedish equities, while 40% was invested in fixed income assets, 5% in real estate and the remainder was invested in private equity.

AP2 admitted the first half of the year saw some major market fluctuations, but suggested activity in the world's equity, fixed-income and foreign exchange markets "was somewhat calmer, compared to autumn 2008".

It revealed the combined relative return on its market quoted assets was 0.1%, which it suggested was driven primarily by the active in-house management of Swedish equities, foreign fixed-income securities and foreign exchange investments.

Eva Halvarsson, chief executive of AP2, said: "Our strategy of maintaining the portfolio's high share of equities has been a key factor in its recovery. Our fundamental approach therefore remains unchanged. We believe a large share of equities is essential if we are to achieve the goal prescribed for us within the Swedish national pension system."

The full half-year report will be published in English on the AP2 website shortly, while a report on the fund's corporate governance operations is expected to be released in September.

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