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UBS could lose €915m AP1 emerging market assets

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SWEDEN – AP1 may pull up to SEK8.3bn (€915m) in emerging market assets from a UBS structured product and award them to new managers.

AP1, Första AP-fonden, has put out a request for tenders for external management of emerging markets equities.

The move means that the fund is currently considering withdrawing part or all of its SEK8.3bn emerging markets portfolio from a UBS structured product called “pearles” and putting them into a discretionary mandate. UBS declined to comment.

A spokeswoman for AP1 stressed that there is no proper discretionary mandate between the fund and UBS, as the investment is made through the MSCI–linked “pearles”.

This is described in AP1’s 2001 report as a product “where the different markets are represented by stratified choices of the listed companies”.

“The management is close to benchmark with a limited active risk,” the report stated.

AP1 has decided to consider active, passive or a mix of both strategies.

“We want to have a broader view,” the spokeswoman explained to IPE. She said that at the moment it was not yet clear whether one or more asset managers would be involved.

One of the key factors that will be considered by the fund is added value after costs, which would justify the change the spokeswoman told IPE. AP1 could make one or more appointments by late spring or summer but added the fund would take its time to scrutinise the candidates.

“We want to select managers we trust and in whom we believe,” she said.

AP1 is currently also in the last stage of selection for three private equity mandates, one global, one focusing on North America and one in Europe. The fund has received 75 tenders and must ultimately chose only three candidates.

“Private equity is such a difficult asset class. We are doing a thorough job in our research,” the spokeswoman said. AP1 could make the appointments at the end of March. But the spokeswoman added: “If we are not ready in March we will not appoint any manager.”

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