The fund’s assets grew SKr6.8bn (€729m) to SKr207.3bn, according to its annual report.

The return on its listed equity portfolio was 1.8 per cent, below the benchmark. Active return was -1.2 per cent on listed assets and -1 per cent on the total portfolio.

Mats Andersson, chief executive officer of AP 4, said: “The fund’s performance is not satisfactory and we did not meet our targets for absolute return or active management.”

Mr Andersson said gains achieved in the first six months of 2007 were erased by the turbulence in the credit market and the year ended with a disappointing active return of -1 per cent.

“The fund’s problem is that the performance of active management remains negative,” he said.

Last year, AP 4 came under fire from the Swedish government for failing to deliver positive active returns. The Swedish buffer fund has since implemented several internal measures to improve this.

The scheme’s target is to achieve an active return of 1 per cent above benchmark over two years.

Mr Andersson said a review of the management organisation was in progress.

This follows the fund’s tender, last month, for a passive global equities madate. The appointed managers will be required to outperform the MSCI benchmark.

AP 4 said regional, sector and small-cap allocation will vary over time. The deadline for tenders is March 10 2008.

Interested applicants should contact AP 4 directly.

In a separate development, the Swedish buffer fund is also looking to appoint a Japanese equities manager and a Pacific equities manager for a total of €1.5bn. An appointment is expected early this year.

KF

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