SWEDEN - Sweden's third national pension fund has embarked on a series of new projects, in a bid to diversify its investment portfolio.
The Skr142.5 bn (e15.5bn) is actively exploring the option of hiring alpha overlay and currency overlay managers.
Fund officials said that the two areas were high on the fund’s priority list and new managers were likely to be hired over the next two years.
“Alpha overlay and currency overlay are areas which can generate active returns for our portfolio,” said one fund official. He however added that AP3 was slow-pedalling its forthcoming projects due to changes in its top management.
AP3’s deputy CEO and CIO Niklas Ekvall resigned shortly after CEO Tomas Nicolin announced his decision to quit after being appointed as president of Alecta.
Fund officials said that the fund was also researching emerging market equity and enhanced indexing in semi-passive investment.
“Emerging market equity is an asset class that we need to have in our portfolio. The only question is when.
“A part of our portfolio is also being managed passively and we would like to see it managed more actively.”
Currently, an equities mandate worth SKr 17,332m run by Merrill Lynch Investment Managers (MLIM) is being managed passively. The fund has a Skr 3,835m equities brief also semi-passively managed by MLIM.
Officials added that hedge funds and foreign index-linked bonds were also on the fund’s list.
Last year, the fund had said that it was considering hiring hedge fund managers to manage around 3% of the total portfolio.
The asset mix of AP3's reference portfolio for 2004 is: Swedish equities: 16%, European equities: 17.5%, US equities: 14.7%, Asian equities: 6.3%, Swedish fixed income: 12.6%, European fixed income: 8.4%, rest of the world fixed income: 6.5%, index-linked bonds: 9.5% and real estate: 8.5%.
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