SWEDEN- Sweden’s second national fund AP2 has announced a first half decline in assets of 9.3% bringing the fund to Sek124.3bn (e13.6bn).
Foreign equities, both hedged and unhedged, managed to beat the benchmark despite respective falls of 11.3% and 19.6%. AP2 says this difference derives from an appreciation of the Krona in the first six months of the year.
Its Swedish equities underperformed the benchmark and dropped 22.9%, largely due to the fall in the telecom sector and, in particular, in Ericsson’s share price.
At the latest count the Swedish fund invested 37% in fixed income, 40% in foreign equities, 19% in Swedish equities, 3% in real estate and 1% in cash. Unsurprisingly AP2’s fixed income holdings performed the best and returned 2.5%.
AP3 maintains that, in perspective, the figures are not too severe- based on a rolling twelve month basis the fund returned a loss of 10.2% but managed to beat its benchmark by 140 basis points.
The fund has announced a change to its investment strategy that will see it increase its holdings in small and medium-sized companies, both local and foreign. AP2’s asset allocation has changed dramatically in the past twelve months and, unlike many other funds, it has actually transferred assets into equities.
At the end of June 2001. the fund invested the Sek63.3bn in equities, a figure that had risen to 72.6bn at the end of June. Fixed income and cash investments at the fund fell from Sek64.5bn to Sek47.1bn.
One of the most dramatic changes at the fund was the increase in allocation to hedged, foreign equities, a category that accounted for Sek39.5bn as the end of June, up from Sek16.9bn in June 2001. AP2 says building up the global equity portfolio helped improve the relative return on investments.