SWEDEN - The e17.3bn Forsta AP-fonden (AP1) is planning to outsource most of its passively managed US equity portfolio to active external managers, following a review of its internally managed passive equity portfolio.
Per Lundborg, AP1’s head of equities, said: “Currently, most of the US and European portfolio is managed inhouse with a combination of active and passive approach. Within European equities, we are looking to expand the number of sectors we are actively managing. However, most of the the US equities portfolio, mainly managed passively, is likely to be outsourced.”
As at 31 December 2004, the market value of the fund’s equity portfolio was SEK 90,659m (e10bn), of which SEK 31,244m was managed externally. Of the fund’s equity holdings at year-end, 39% were in North America, 22% in Europe and 21% in Sweden.
Writing in the annual report, AP1’s managing director William af Sandeberg said one of the main goals in 2005 was to “look over and tighten up those parts of internal equity management that are currently managed passively”.
The fund said that it plans to increase its active risk and active returns in 2005 and to this end, it had developed a new risk budgeting model that would enable a stronger focus on investment areas with higher expected returns.
One of AP1’s priorities is to build a “competitive global management” organisation and to achieve this the fund has made “significant changes” in both the overall investment process and the individual management units.
“The fund’s ongoing transformation to global asset manager has also brought about changes in the form of higher operating expenses. Measured in relation to the average value of net assets, the annual expense ratio has climbed from 0.13% to 0.16% since 2001,” said Sandeberg.
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