SWEDEN - AP2 has posted a return of 11.6% in 2004 on the back of strong performance from Swedish equities and favourable exposure in foreign exchange.
The fund saw its assets under management reach SEK 158.1bn (e17.4bn) by the end of the year, an increase of SEK17.8bn compared with the previous year.
AP2 said the focus and organisation of asset management activities had changed during 2004, moving towards a “clearer distinction between the passive and active management of risk”.
“A number of external mandates awarded for management of equities on the Swedish and European markets have been terminated and a substantial amount of these assets are now managed in-house,” the fund said in its year-end report.
“During the year, the fund has established a quantitative analysis group. The proportion of active mandates awarded will increase in the field of tactical asset allocation and in the form of global mandates to manage equity, fixed income and FX portfolios.”
In 2004, the fund terminated four Swedish and twelve European external mandates on the equities side.
AP2 said the Board of Directors had also developed a completely new model for its strategic portfolio. In 2005, currency exposure was increased from 8 to 9%, while the target for real return on investments on in-house investment was raised from 3.5 to 4.5%. The general allocation of 59% equities, 36% fixed income instruments and 5% alternative investments remains unchanged.
The Swedish equities portfolio posted a return of 19% in 2004. The foreign equities portfolio noted a return of 11.5%, while the fund’s currency-hedged benchmark index noted an increase of 11.8%.
FX exposure accounted for 10.2% of the fund’s combined assets at year-end, or 16.2bn, AP2 said.
Fixed income generated a return of 7.3% while alternative investments - which comprise real estate, hedge funds and private equity funds - generated a 12.2% return on investment.
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