SWEDEN - Swedish equities outperformed all other asset classes for AP2, Sweden's second national pension fund, during the first six months of the year.
The asset class generated the best return at 11.1%, helping the Gothenburg-based fund achieve an overall 7.0% on its assets between January and June. This means an increase of SEK9.6bn since year-end 2002, or total assets of SEK126.7bn.
“The favourable result may largely be attributed to the positive development of the global stock market, a trend which has furthermore continued and strengthened following the close of the report period,” said chief executive officer, Lars Idermark.
“From the perspective of the Second AP Fund, the decision to maintain the strategic focus that had been determined, involving a relatively high ratio of equities in the asset portfolio, proved to be the correct choice.”
The relative return amounted to 0.1%, excluding operating costs and real estate. Net profit on operations during this period amounted to SEK8.2bn.
Of all the asset classes, only real estate failed to meet its benchmark. In addition, approximately 7.5% of the fund’s assets had been exposed to foreign currency, which is lower than its reference index.
“This has contributed favourably to the relative return,“ added Idermark.
All of Sweden’s national funds have now posted positive first half results.
AP4 also announced that it had achieved a 6.7% return on total assets, but underperformed its benchmark by 0.5% due to a drag from unlisted equity investments.
The fund’s capital value stood at SEK122.7bn on 30 June, compared to SEK113.6bn at the start of the year. Net profit for the period was SEK7.7bn, compared to a loss of SEK13.8bn last year.
Commenting on the report, fund president, Thomas Halvorsen, said: “It is gratifying that the fund has reported its strongest half-year figures in absolute terms since the remodelling of the National Pension Scheme at the end of 2000.
“The primary driving force has been rising share prices on world equity markets, which hopefully now have reached their lowest point in the current economic cycle.
“However, the fund's return of 6.7% relative to 7.2% for the benchmark index is unsatisfactory, even though the fact that much of the underperformance stemmed from a negative return on unlisted assets (-3.3%).”
The return on liquid assets - that is excluding unlisted equities - amounted to 7.0%.
Strategy-wise, some 16.1% of total assets were subject to currency exposure, compared to 16.8% at the start of the year.
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