SWEDEN – AP3 says its total return in 2003 was 16.2%, taking its value to 142.5 billion crowns (15.5 billion euros).

“Favourable market developments, with a rising equity market and falling interest rates, boosted the return on fund capital for the Third Swedish National Pension Fund in 2003,” the fund said.

“The continued rise in equity markets in 2004 means the capital losses incurred as a result of the markets' fall in 2001-2002 have now been fully recouped,” the fund said.

At year-end, its market value was 142.5 billion crowns, from 120.2 billion crowns at the start of the year. Asset management income amounted to 19.8 billion crowns.

"It is clearly good news that the losses from the stock market downturn have been eliminated,” said chief executive Tomas Nicolin. “Meanwhile, one should remember that it is necessary to take financial risks in order to meet the fund's
long-term commitments within the pension system.

Nicolin recently announced he was leaving AP3 to join occupational pension provider Alecta.

For the market-listed part of the portfolio, which excludes real estate and private equity, the return was 17.2% - just under the benchmark return of 17.3%.

The fund said it will adjust its reference portfolio, increasing its weighting in Asian equities by 2.5 percentage points at the expense of US equities. The weighting in index-linked bonds is being increased by two percentage points at the expense of nominal bonds.

And it said that the share of foreign currency exposure in the reference portfolio is to increase from 10.8% to 19.3%. The fund's foreign currency exposure at year-end amounted to 12.8 billion crowns, corresponding to nine percent of the total portfolio.

AP3's reference portfolio for 2004:
Swedish equities: 16%
European equities: 17.5%
US equities: 14.7%
Asian equities: 6.3%
Swedish fixed income: 12.6%
European fixed income: 8.4%
Rest of the World fixed income: 6.5%
Index-linked bonds: 9.5%
Real estate: 8.5%