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Swedish government critical of AP fund performance in annual review

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SWEDEN - The Swedish government has criticised the performance of the country's buffer funds AP2 through AP4 in its annual evaluation of the system.

As it managed to achieve a positive return AP1 was mostly spared criticism, but Peter Norman, the minister for financial markets and former head of AP7, said he was not completely happy with the fund and noted in the report that it remained unclear whether the margins were large enough considering the operational risks.

All of the buffer funds have worked on developing a number of strategies to better cope with the volatile financial markets. The funds are evaluating the results of the new strategies and models used, something the government has requested especially, and the government said it saw the developments as positive and wanted to see them continue.

Last year the government appointed Mats Langensjö to chair the inquiry into the future of the buffer funds. The findings of the inquiry are expected in August.

Apart from evaluating the four buffer funds, the government also evaluates AP6 at the same time. AP6 has a mandate to invest in private equity only and is not a buffer fund.

In its report the government also expressed concern over AP6 and write-downs incurred by the private equity fund. It did not reach the targets set by the board between 2003 and 2011, despite having changed strategy and a major clean-up of its holdings, with the clean-up resulting in the large write-downs of concern to the government.

The report said it was particularly concerned about the size of the write-downs and stated further that the government would follow up how such a large change in asset valuation can be possible from one year to another, without any direct connection to the overall economic or market development.

Apart from the evaluation of the funds the Swedish government also appoints the boards for the funds, which in total are 50 members, including six chairmen and six deputy chairmen.

This year, seven members are new and are replacing the same number who had served on the boards for eight years, which is the time limit set by the government.

AP2 gained three new board members Ulrika Boëthius, Lenita Granlund and Niklas Johansson, while AP3 gained one new member, Elisabeth Unell, AP4 saw two new members appointed, Sven Hegelund and Erica Sjölander, and AP6 one in Rose Marie Westman.

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