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Sweden
Chris Newlands
AP1, the SKr218.79bn (€23.27bn) Swedish buffer fund, is to increase its reliance on equities at the expense of its bond holdings.
Johan Magnusson, the fund’s newly appointed managing director, who was headhunted from SEB Investment Management in March, told nrpn that the fund “should and can have more exposure to equities”.
Following the results of a recently completed ALM study, Mr Magnusson said: “We have carried out a new ALM study and it points to the fact that we should have more exposure to equities.
“It is a requirement that we hold at least 30 per cent of our portfolio in secure bonds but we are allowed to invest the rest in equities and we need to make sure we use that 70 per cent effectively.”
Currently, the fund has 59 per cent of its assets invested in developed and emerging market equities and 38 per cent in Swedish and foreign bonds. The rest is made up mostly of unlisted assets.
“I do not want to rush into making any changes – and have not communicated anything internally or externally – but we do need to make sure we have the right long-term asset mix,” he added.
Mr Magnusson, who has spent 25 years in the asset management business, replaced former managing director, William af Sandeberg, who postponed his retirement by two months to accommodate Mr Magnusson’s arrival. “I already know I love this job and, although I have joined the fund at a time of great market instability, I feel there are lots of opportunities out there for us to explore,” Mr Magnusson said.
Since its inception in 2001, AP1’s net assets have grown by SKr65bn, which corresponds to an average annualised return of 5.2 per cent before and 5 per cent after operating expenses.
Last year, AP1 was the only buffer fund to beat its active management benchmark after it delivered total returns of 4.6 per cent after expenses.
One of the best performing assets was its emerging market equities, which returned 30 per cent in 2007. Emerging market equities make up 6 per cent of its equity portfolio.
