AP1 Lead Investor in New Aberdeen Secondaries Fund
Första AP-fonden (AP1), one of five buffer funds for the Swedish pension system, is acting as lead investor in Aberdeen Asset Management’s new secondaries fund Aberdeen European Secondaries Real Estate.
According to Aberdeen, the secondaries fund received just over €151 million in commitments and will be composed of around 15 funds with exposure to 200 European properties.
Sweden’s €105 billion (US$ 142.72 billion) national income pension system is managed by five AP funds: AP1 – AP4 and AP6 – AP5 was dissolved and no longer exists. (For further enquiry, AP1’s website has a consolidated history of the funds). Each fund is independently managed. AP1 is tasked with generating a total return of 5.5% over a rolling 5 year period. In its semi-annual report, AP1 reported that it had produced an annualized return of 6.1%, surpassing its target.
However, despite this performance, the funds have been criticized for high fees and less than stellar returns. The Swedish government commissioned Mats Langensjö, a management consultant, to conduct a report on the funds’ alleged inefficiencies. His recommendations were to consolidate the funds from 5 to 3 with an organization to be named the Pension Reserve Board overseeing the entire operation.
Langensjö’s suggestions were made just over one year ago, but until now the Swedish government has not fully acted on them. The only positive action came in the form of an April 8th newsletter in which the Swedish government stated it would review the AP funds sometime this year. For now the matter is still ongoing.
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