Swedish AP funds take different routes to find the alpha holy grail

Mon Apr 4, 2011

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Swedish national buffer funds research hedge funds as they push the alternatives boundary beyond private equity and property


By Pirkko Juntunen

André Havas and Mats Andersson
The Swedish national buffer funds, or AP funds, have become somewhat regarded as pioneers in seeking and adapting new investment ideas as well as pushing for sustainable investments since their reorganisation and re-launch in 2001. Despite having fairly restrictive investment guidelines (see box, p16), the four funds have been diversifying into alternatives for many years.

Första AP-fonden, also known as the First Swedish National Pension Fund or AP1, together with AP2, AP3 and AP4 are buffer funds in the Swedish pension system. The capital of the buffer funds is used to even out temporary fluctuations during periods when pension contributions are not sufficient to cover pension disbursements from the income pension system. The returns generated by the AP funds are one of several factors that are influential in ensuring the stability of the pension system.

The four buffer funds - AP1, AP2, AP3...

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