SWEDEN - AP2, the second Swedish national pension fund, is standing by its equity-bias despite a sharp -15% plunge in asset values last year.
Capital values totalled SEK117.1bn (E12.8bn) at December 31st 2002 compared with SEK133.5bn at the start of the year. Net inflows were SEK5bn. The fund marginally outperformed its benchmark by 0.4%. The Gothenburg- fund blamed the worst global markets for over 70 years for the result. Some leading exchanges across Europe, Asia and the US fell by around 23% last year.
In particular, AP2 was hit by a -38.6% dive in the OM Stockholm Stock Exchange in which AP2 invests around 20% of its assets. But chief executive officer, Lars Idermark, was confident that the fund’s current investment strategy would prove profitable in the long-term. It is naturally deeply dissatisfying to have to report such a sharply negative result,” he said.
Nevertheless, our investment strategy is extremely long-term, and we are therefore determined to pursue it all the way. This means that our portfolio will continue to consist of approximately 60% equities and 40% fixed-income instruments.
“All analyses indicate that this composition promises the best return when operating with an investment horizon of between 10 to 15 years.
This is the worst return posted by AP2 since its inception in January 2001. So far, the fund has failed to post a positive annual- or half yearly return.
AP2 is to continue to activate parts of its portfolio. The fund recently appointed 13 new external investment managers to its roster. It added that once the diversification of the bond portfolio was complete certain portfolios would be externalised, including high-yield bonds.
*AP2 will publish its full annual report for 2002 in March.
This week's edition of Professional Pensions is out now
Collective defined contribution (CDC) schemes will need clear and transparent governance frameworks, as well as effective communication strategies, to be a success, the Work and Pensions Committee (WPC) has been told.
The aviation sector's constant evaluation of mistakes to improve safety should be applied to defined benefit schemes, as too many are making the same mistakes again and again, latest research shows.
A month of strikes are due to hit 64 universities from tomorrow over major reforms to the Universities Superannuation Scheme (USS).