SWEDEN – Sweden’s third national buffer fund, the 142.5 billion-crown (15.5 billion-euro) AP3, saw its revenue from stock lending rise by 29% in 2003.

Tredje AP-fonden said in its 2003 annual report that stock lending revenue was 35.1 million crowns (3.9 million euros), up from 2002’s 27.2 million.

Bond lending revenue rose to 1.6 million crowns from 1.1 million while equities lending revenue rose to 33.5 million from 26.1 million.

The fund said: “Like most fund managers, AP3 engages in securities lending whereby it conducts short-term lending of equities and bonds to counterparties with high creditworthiness and that provide full collateral.”

The fund, which made a 16.2% return on investments in 2003, said securities lending revenue is reported as interest income in the income statement.

Last month Ireland’s National Treasury Management Agency said the National Pension Reserve Fund earned more than four million euros from stock lending and brokerage commission recapture in 2003.

AP3 also said that it expects its private equity portfolio to generate a positive return within four to five years. “Private equity investments require a long-term investment approach and yield a negative return for the first few years.”

The fund added that it has bought a new performance analysis system called PEARL from Dutch consulting firm Ortec. “It will expand the level of detail and improve the security and reliability of the fund’s portfolio performance analysis,” AP3 said.

The fund has recently lost its two top managers, with the departure of chief executive Tomas Nicolin to Alecta and chief investment officer and deputy chief executive Niklas Ekvall to Carnegie.