AP3 switches US equity portion to Asia-Pacific region

SWEDEN –Sweden’s third national pension fund, AP3, has reduced the size of its 24.7 billion Kronor (2.6 million euros) US mandate by 2.5% of the total portfolio to boost a 930 million kronor (100 million euros) Asia Pacific exposure.

AP3, one of Sweden’s four national pension funds, also announced that JP Morgan Fleming, which previously managed the entire Asia-Pacific portfolio has been joined by Schroder Investment Management and APS each managing 33% and 17% of the Asia-Pacific allocation.

The decision to trim the US mandate, managed by Merrill Lynch Investment Managers, came as the pension‘s board considered their annual Asset Liability Modelling Study.

The ALM study prompted the fund to shift resources from US to Asian equities, according to Pernilla Klein, communications manager at AP3 for risk and return diversification reasons.

Decisions on portfolio management are generally made by the board every December and changes are implemented at the beginning of the year, said Klein.

“This is quite a new mandate and we continue learning more and more about what is the right portfolio for us,” she explained.

AP3 manages 140 billion Kronor of the buffer fund capital in the Swedish public pension
system, of which about 30% is externally managed according to a multi-manager approach.

The fund, whose chairman was fired by the government last year, said in February that its total return in 2003 was 16.2%, taking its value to 142.5 billion crowns (15.5 billion euros).

Last month, Tomas Nicolin, AP3’s chief executive since 1998, said he would leave the fund to join Alecta, Sweden's largest mutual pension company.

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