SWEDEN - The domestic equities portfolio of the second Swedish buffer fund AP2 has outperformed its benchmark by 18.7% over the past five years.
The SEK232.8bn (€25.2bn) AP2 fund takes a particularly active role with respect to corporate governance in this portion of its portfolio
"The method involves asking companies a whole lot of questions, some of which are quite penetrating," Carl Rosen, AP2's head of corporate governance and communication said.
"If I come into contact with a company that has problems living up to the Swedish code of corporate conduct, I become suspicious," Eva Halvarsson, chief executive of AP2, added.
The approach is only applied in the Swedish equity portfolio because applying it to other parts would be too time consuming, Rosen explained in the fund's corporate governance report for the year ending June 2007.
Wal-Mart and Singapore Technologies are the only companies to have been excluded from the portfolio. In the case of Wal-Mart the fund follows the reservations with regard to labour conditions voiced by the Norwegian ethical council. Singapore Technologies "could potentially manufacture landmines", AP2 stated.
Future challenges are to increase corporate governance in AP2's private equity investments.
Furthermore, the fund wants to "ensure that shareholder rights are taken more seriously" especially with respect to increasing pay levels for Swedish managers.