The fund has awarded Carnegie a pure alpha equity overlay mandate and is expected to appoint two further European managers by the end of June, with all three contracts due to commence in the third quarter.

Carnegie’s mandate follows the appointment of Danske Bank in April for an alpha creation mandate.

The SKr80bn (€8.6bn) fund has been running an alpha/beta separation programme internally for Swedish equities for more than a year. But Richard Gröttheim, CIO of AP 7, confirmed the fund would tender for external managers to manage new alpha generation mandates for European equities after the summer.

Mr Gröttheim said: “We think it’s been fruitful and we are now rolling it out for external managers as well. For the time being, it’s applied only to Swedish equities but we’re moving into European equities after the summer. We don’t manage any European money ourselves so we will look to hire external managers for this.”

AP 7 will also reportedly tender this year for a second Far East equity and a second Japanese equity manager, as well as index providers to manage US, European and Swedish equities.

Schroders and Nomura, which manage the Far East and Japanese exposure, and State Street Global Advisors, which manages indexation across the three regions, will be retained.

Niklas Ekvall, head of asset management at Carnegie, said alpha/beta separation created greater transparency and was more cost-effective.

“You are paying for the beta in a more transparent way, so you get a more transparent beta structure in the portfolio,” he said.

Mr Gröttheim added: “You also get more freedom in managing the mandate because we don’t allocate any cash; we only allocate the risk budget. It’s more focused, more efficient and so far it’s been performing better.”

However Mr Ekvall warned full separation was difficult to achieve in less liquid markets.

KP

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