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Sweden’s AP1 to look at hedge funds

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SWEDEN – The 139 billion-crown (15.2 billion-euro) Swedish buffer fund Första AP-fonden says it plans to research hedge funds.

“In 2004 the fund will continue its efforts to select and invest in private equity funds and will begin researching hedge funds and additional real estate investments,” said Sofia Ericsson, AP1’s head of alternative investments. “We are in the midst of a build-up phase for alternative investments.”

She added: “A long-term ambition is to increase the share of alternative investments in the portfolio to 10% of the fund capital.” She pointed out that no more than five percent of AP1’s total assets may be invested in unlisted securities. She made the remarks in the fund’s 60-page 2003 annual report.

Meanwhile, the fund also said that it has terminated its staff bonus system, saying it “no longer serves its purpose”.

“Now that the government’s new guidelines for incentive schemes in state-owned companies prevent us from paying bonuses in period with falling stock markets, the stems no longer serves its purpose as a management tool,” said managing director William af Sandeberg.

“As a result, the fund’s board of directors has decided to terminate the system entirely as of 2004,” Sandeberg said in the report. The system, considered important by management and board, had been in place since mid-2001.

Sandeberg said the system had helped motivate employees and a means of reducing payroll costs. “The targets have been set to require outstanding performance on the part of the employees in order to qualify for bonuses even during years when no variable compensation is paid to the fund’s employees.”

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