SWEDEN – Tredje AP-fonden, the third Swedish buffer fund AP3, has unveiled a new strategic portfolio for 2006.
The move follows a benchmark busting 17.9% investment return in 2005.
“The board of directors has set a new strategic portfolio for 2006 in which currency exposure has been reduced from 14.7% to 13%,” AP3 said.
Weights in index-linked bonds have been increased from zero to 7.5% at the expense of nominal bonds.
Asian and emerging market equity weightings have been increased, while exposure to Europe and North America has been reduced.
In the fixed income portfolio, the weight of nominal bonds in Asia and the US has been increased, and the weight in European nominal bonds has been lowered.
The fund said the 17.9% return, a record, beat its benchmark by 1.2%. The fund’s capital rose by SEK31.7bn to SEK192.0bn (€20.4bn).
It said: “All assets in the fund's portfolio generated positive returns, which can be attributed to strong growth on equity markets and successful active management.”
The return on the market-listed portfolio, which excludes private equity, was 17.3% before expenses.
It said its global equity management contributing SEK1.1bn to active return, while tactical asset management contributed SEK800m.
"Our strategy of a highly diversified portfolio combined with active management enjoyed success in 2005,” said chief executive Kerstin Hessius in a statement.
“Net profit was the highest in our history and enabled us to contribute an additional SEK28.8bn to the pension system. Strong returns in 2005 helped to lift our real return on fund capital to an average annual rate of 3.5%."