A Swedish government report, based on research from Wassum Consulting, found that the AP funds’ active management had not yielded significant enough returns despite large amounts of fund resources being poured into it.

“The evaluation has not been able to conclude with any certainty that the funds’ style of active management after costs has contributed positively to performance during 2002 to 2006. But this doesn’t mean that one or two of the funds hadn’t succeeded,” Mats Odell, minister for local government and financial markets, told nrpn.

Indeed, while AP 2 and AP 4 failed to beat their benchmarks over the five-year period between 2002 and 2006, both AP 1 and AP 3 outperformed their comparative indices. AP 4 was singled out for particular criticism after its Swedish and global equity portfolios failed to deliver adequate returns.

However, the funds were for the first time compared with 33,975 simulated investment portfolios, which the AP funds largely outperformed.

“This highlights the importance of viewing the funds’ returns over a time period of several years,” said Mr Odell. “The AP funds have – so far – positively contributed to the Swedish pension system.”

AP 6 was evaluated separately in the report. The government found its active management to be satisfactory, although it is believed that its board set its benchmarks too low. Despite returns of 13.8 per cent last year the fund’s average return over the five-year period was 0.6 per cent.

The report has now been handed over to Parliament.

CL

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