SWEDEN - AP2 posted record net returns of 18.7% in 2005, ahead of sister fund AP4, which returned 16.9%, slightly below its benchmark.
AP1, AP2, AP3 and AP4 have all generated positive overall returns after the restructuring of the national pension system five years ago.
AP2 saw its assets grow by SEK32.5bn and the fund’s net profit for the year was SEK29.6bn, while AP4’s net profit stood at SEK25.8bn taking total assets to SEK180.2bn.
Both funds attributed their growth to an upturn in equity markets, with AP2 returning 36.6% on Swedish equities and 22.9% on global equities.
For global equities, AP4 posted a return of just 14.5%, 0.3% below the index, while Swedish equities returned 34.1%, 2.2% below the index.
AP4 president Thomas Halvorsen acknowledged the fund’s equity positions were too “defensively positioned” to meet its indexed targets.
He said “The long term prognosis for the system has improved considerably. However I must acknowledge that AP4 failed to outperform its benchmark in 2005.”
AP2 also claimed that its “limited” level of exposure in foreign currency (11% at year end) had a negative impact on fund earnings due to the weak Swedish krona.
In 2005 AP2 completed its portfolio restructuring where it increased the number of specialist high risk/high return mandates within its portfolio.
By Daniel Flatt
Partner Insight: A fiduciary management approach gives trustees a richness of information you can't get with a standard adviser approach, especially in times of market uncertainty, explain Russell Investments' David Rae and Paul Wharton
The PPI has unveiled a policy paper outlining current considerations and policy debates relevant to DC scheme default strategies. Kim Kaveh explores some of its views.
The £30bn local government pension pool has appointed Quoniam and Robeco to manage an active equity portfolio worth around £400m.