Swedish roundup: AP7, Old Mutual, Skandia, 20-year bonds
SWEDEN - 'Alpha management' has generated SEK360m (€40.5m) over the last six years at AP7, the default fund in Sweden's defined contribution system, according to an internal review.
The fund - which introduced an alpha/beta separation within its portfolio in 2005 - said the alpha management segment had contributed SEK206m over the period, after factoring in the SEK154m paid out in fees.
AP7 attributed its outperformance relative to many hedge funds - to which it has likened itself in the past - to its "ability to attract good asset managers".
In a written review, AP7 also recommended shortening the time between evaluation periods for the fund in order to drop underperforming managers, as well as appoint top-performing managers, more quickly.
In other news, shareholders of Old Mutual, the South African financial services provider, have agreed on the sale of Sweden's Skandia AB to Skandia Liv, with almost three-quarters voting in favour and only 0.01% against.
The SEK2.4bn deal is expected to be finalised on 21 March, resulting in the restructuring of Skandia Liv into a mutual company and Skandia AB a subsidiary.
Lastly, the Swedish National Debt Office has issued a 20-year bond to meet increasing demand from institutional investors hit by low interest rates and low equity returns.
The new 20-year nominal bond issue was done in exchange for two short-dated bonds.
The volume issued was SEK11bn.
The exchange was made 0.46 percentage points above the 10-year Swedish government bond.
The new bond was sold through syndication, where the lead managers jointly sold the bond on behalf of the debt office at the conditions approved by the agency.
The Swedish government decided in the Guidelines for 2012 that the benchmark for borrowing maturities longer than 12 years should be SEK60bn - that would entail an increase in the current volume of approximately SEK20bn.
The debt office said it would not offer further issuance of the new bond in the near future.