SWEDEN – Swedish reserve fund Forsta AP-Fonden, or AP1, says its year-long strategy to maintain a high proportion of equities has paid off.

“The fund’s strategy since mid-year 2002, to maintain a high proportion of equities, has borne fruit,” the fund said. At the end of June this year its equity exposure was 58%, while foreign exchange exposure was 15%.

AP1 says it returned 6.6% in the first six months of 2003. At the end of June it was valued at 126.6 billion crowns (13.7 billion euros), up from 117.1 billion crowns at the start of the year. The portfolio rose in value by 8.1 billion crowns, alongside a net inflow of 1.4 billion crowns.

The news follows a 13.8%, or 2.05 billion euro, decline in the calendar year 2002.

“It is highly satisfying that our profit has improved and that the fund capital has grown by 9.5 billion crowns since year-end,” said managing director William af Sandeberg.

“However it is obviously much too early to let down our guard even if we are seeing an upswing in the equities market.”

AP1’s 6.6% return is in line with its sister fund Tredje AP-Fonden. Last week AP3 said it returned 6.9% in the first six months.

Excluding alternative investments, the listed portion of AP1’s portfolio unperformed its benchmark by 0.1 percentage points.

AP1 said its asset management costs in the first half were 83 million crowns, largely unchanged from the prior year period. The costs correspond to 0.14% of average assets under management.

AP1’s sister funds AP2 and AP4 are due to report their first-half returns on August 28.

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