The four AP-funds were launched on 1 January 2001, with capital of SKr540bn divided equally among them.
Due to Swedish demographics, AP1 requires a high return, hence the high equity weighting. Första AP-fonden’s strategic benchmark is made up of 70 per cent foreign assets. The benchmark is composed of 57 per cent equities, 40 fixed income and 3 per cent alternatives.
The equity portfolio is divided into five areas, North America, Europe, Pacific, Sweden and emerging markets. Fixed income is divided into the same areas excluding emerging markets. There is, however, a restriction on currency exposure.
The fund is not allowed to have more than 30 per cent of total capital exposed to foreign exchange (including euro) during 2004. The restriction was 15 per cent and binding at launch. Today exposure in the benchmarkportfolio is 20 per cent.
The fund has also changed the benchmark portfolio in order to decrease the investments in fixed income in Japan. Furthermore, small-cap investments were not part of the benchmark at the start.
Alternative investments (private equity, hedge funds and real estate) is an asset class with potential for higher returns, associated with greater risk. A long-term investment horizon is best suited for a long-term investor such as Forsta AP-fonden.
The fund ultimately seeks to increase the share of alternative investments (private equity, hedge funds and real estate) to 10 per cent.
