SWEDEN – The seventh national Swedish pension fund (AP7) – the default fund for non-choosers in Sweden’s PPM system - has selected Nomura Asset Management UK to manage a SEK1.1bn active Japanese equity mandate.
AP7 says it expects this amount to grow by around SEK400m in April as a result of new cash flow into the fund.
The fund currently has around SEK15bn of assets under management, but in April it expects a SEK6bn inflow when PPM contributions for 1999 are paid in.
In May, new entrants will contribute around SEK3bn to the PPM system, according to estimates.
Some SEK1bn might go to AP7 if young entrants choose to place their contributions in line with the choices of older pension investors.
Last year, around two thirds of the eligible population chose to allocate their assets through commercial funds with the remainder going to AP7.
The fund’s Japanese equity portfolio is benchmarked against the FTSE All World Index Japan benchmark.
William M Mercer acted as consultant to the fund in its selection procedure.
“We consulted William Mercer on our allocation and came to the conclusion that it is sensible to have purely active managers in Japan and Asia Pacific, while we should have a purely passive approach to the US. It is too transparent and the market is too well analysed for us to gain from active allocation,” says Richard Gröttheim, deputy executive president at AP7.
“In Europe we’ll split the portfolio in two, with two active mandates for half of the brief and State Street managing the other half passively. In Sweden we manage most of the portfolio actively in-house, with a small part actively managed externally and one quarter managed passively by State Street,” he adds.