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AP3 names European small/mid-cap managers

SWEDEN – The 129.7 billion Swedish-crown (14 billion-euro) Swedish national pension fund AP3 has made a 291 million-euro move into European small and mid-cap equities with the appointment of four investment managers.

Tredje AP-fonden said the mandate is divided between Axa Rosenberg Investment Management, J P Morgan Fleming Asset Management, Kempen Capital Management and Pictet Asset Management.

Axa Rosenberg was awarded 117 million euros while the other three managers were awarded 58 million euros each.

“These managers have investment styles that complement each other well, contributing to the risk diversification of the
portfolio,” AP3 said. The benchmark is the HSBC European
Smaller Companies Index, ex-Sweden.

Until now, all of the fund's European equity portfolios have been invested in large-cap equities, AP3 said.

“By extending the investment universe to small- and mid-cap equities, the fund will attain a beneficial diversification of risks.” It added that assets to the new mandates have been transferred from the fund's internal management of European large-cap equities.

It has also signed agreements with three other managers - BNP Paribas Asset Management, Morgan Stanley Investment Management and Scottish Widows Investment Partnership – as possible extra managers within the same mandate.

The move is part of AP3’s strategy to create a “universe” of asset managers, within which reallocations can occur when appropriate.

Last week AP3’s chairman Johan Bjorkman was fired by the Swedish government due to alleged “insider trading” and “tax crime” that did not directly involve the fund itself.

Sweden’s first national pension fund, AP1, had been planning to tender a European small-cap equity mandate, but has delayed the tender until it has appointed managers for a US small-cap equity mandate that it launched in July.

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