SWEDEN - The SEK196bn (€21.1bn) AP3 has introduced fundamental indexing in a bid to enhance its asset management operations, with an initial SEK2bn (€215m) portfolio to be managed internally using the FTSE Global Wealth Allocation (GWA) Europe Index.
AP3 said it was the first European pension fund to adopt the GWA index, which covers European large cap and mid cap companies, including the UK.
Kerim Kaskal, head of asset management, claimed fundamental indices were ideal for AP3 as a long-term investor because they had outperformed market-weighted indices over longer periods of time.
"Unlike traditional indices, a fundamental index is not market-weighted. In practice, this means that the index is not weighted according to market expectations of company performance but instead captures reported fundamentals."
"The fund is continually looking for new sources of return and instruments to develop our asset management operations," he added.
The FTSE GWA is weighted on the basis of three variables: Net profits, cash flow and book value.
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