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AP3 aiming to run managers more efficiently

SWEDEN - The SEK160bn (€17.3bn) Swedish third buffer fund, Tredje AP-fonden, says it must be more efficient in the way it deals with its external managers.

Cecilia Sved, AP3’s head of external management said the fund has a three-strong team monitoring 18 different equity mandates worth a total SEK45.4bn managed by 13 external managers.

Speaking at the European Fund Manager Selection conference, Sved said the team she heads is also expected to monitor “daily, weekly, monthly, quarterly” and to visit managers at least once a year.

She said, of managers: “How many can we handle? We are close to capacity limit.” She told IPE on the sidelines that the capacity issue was not likely to prompt the fund to manage more assets internally.

“Either we have to hire more to take care of external managers or we have to be more efficient in the way we work,” she said.

She also said that AP3 did not seek to be an asset manager’s “dominant” client, but prefers being within the fund’s top five clients. She told IPE that it was more for the good of the managers in case the fund wanted to withdraw a mandate.

“We do not want to put that pressure on the manager,” she said, adding that AP3 always tried to get its “expectation right”. It expects out-performance over the whole cycle,
Sved said, but not necessarily in all market conditions.

The six Swedish state pension buffer funds, which Sved said together represented 10% of the state’s future pension commitments, are to meet local government and financial markets minister Sven-Erik Österberg to discuss a government report on their structure.

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