Swedish institutional investors allocated around 40% of total assets to equity investments at the end of 2000, according to figure from Watson Wyatt. Total assets invested in domestic equities represented 24%, whereas exposure to foreign stocks accounted for 16% of total pension fund portfolios.
On the fixed income side, around 41% of total assets were invested in domestic bonds and 13% in fixed income vehicles from foreign countries.
Exposure to real estate accounted for 4% of the portfolios and investment in cash and cash instruments represented 2% of assets.
New investment rules approved in January 2001 have brought more flexibility to the Swedish pension fund market, reducing the limits to investment in equities for the AP funds. Until the end of 2000, the AP funds were investing around 85% of their assets in the Swedish money and bond markets, but the new legal framework has allowed these funds to diversify across different asset classes and geographical considerations. Because of this, some estimate the current allocation to equities as between 45% and 50% of total assets.