SWEDEN – The Second Swedish National Pension Fund/AP2, in the news this week amid Old Mutual’s bid for Skandia, has announced an 18.7% return in 2005.
Part of its success was due to tactical asset allocation, it said. Assets grew by SEK32.5bn to SEK190.6bn (€20.5bn). The fund said the return was its best net return on invested assets since it was founded in 2001. The fund also made a net profit of SEK29.6bnn in the year.
It said: “The solid growth in fund capital may be attributed primarily to the maintenance of a high allocation of equities, fully in line with long-term investment strategy.”
And it said its 0.2% positive relative return for market-listed assets was “primarily attributable to the success of its tactical allocation during the year”.
It added that it funded mandates in TAA and international bonds and credits during the year.
The return generated on Swedish and foreign equities amounted to 36.6% and 22.9% respectively. Fixed-income assets returned 4.3%. Alternative investments posted a return of 30.1%.
The fund also said that the restructuring of its portfolio management activities was completed in 2005.
Under the new system mandates awarded were classified according to the level of risk accepted. A large portion of its low-risk equity management has been taken over by its in-house quantitative management group, established in 2004.
Sister fund AP4 has unveiled a 16.9% return in assets, growing to SEK180.2bn – although the benchmark index was up 17.0%.
AP4 president Thomas Halvorsen explained that the global equity and Swedish equity portfolios were “too defensively positioned”.
He added: “This year’s excellent absolute return means that AP1, AP2 and AP4 have now generated a clearly positive overall return since the restructuring of the national pension system five years ago.”