SWEDEN/DENMARK - Investment in equities produced good returns for Sweden's first and third AP funds, in addition to PKA, the Danish pension fund manager, according to their half year reports.
AP3 yielded a 6.9% return over the first six months of 2007 making SEK14.5bn ($2.1bn) and taking the fund's value to SEK 227.7bn (US$32.9bn).
In the AP3 report, Kerstin Hessius, the organisation's CEO, said: “Our experiences so far this year have been positive, with active management once again making a positive contribution to overall return in the first half of 2007.”
Swedish equities returned 13.7% for the fund, with foreign equities returning 9.3%. As a result, both types of equities contributed 1.7% and 4.2% to the fund’s absolute return respectively.
Hessius added: “The next steps involve the introduction of different mandates for global asset allocation and finalising the restructuring of the equity management mandates.”
She warned however, that equity returns had been hit by the recent credit crunch and produced some negative returns in the first two months of the second quarter.
Meanwhile, AP1’s investment delivered a 13.1bn (US$1.9bn) return and increased its assets to SEK 221bn (US$32bn).
William af Sandeberg, managing director for AP1, noted: “All units in internal management made a positive contribution to the period’s excellent results, where tactical asset allocation, equities and fixed income showed particularly strong development.”
Despite this, he added that external management of the portfolio had posted a marginal negative return over H1.
Overall, Swedish equities produced a 15.1% return for AP1, with emerging market equities returning 17.9% and foreign equities 7.7%.
PKA, which manages investment for eight pension funds, produced a -1.6% return for H1, despite good returns on domestic and foreign equities.
Claus Jorgensen, head of equities at PKA, told Global Pensions that a rise in interest rates had hurt returns on the interest rate hedge of its liabilities.
Jorgensen added: “Seen together with the effect that higher interest rates have on our liabilities the development in H1 2007 is satisfactory.”
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