Swedish Pension Fund AP1 To Make First True Hedge Fund Investment

AP1, the largest government pension fund in Sweden, has decided to make its first true hedge fund investment. AP1 will invest 40 million Euro in the Swedish hedge fund Cevian 2, a Stockholm based fund managed by Cevian Capital. AP1

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AP1, the largest government pension fund in Sweden, has decided to make its first true hedge fund investment. AP1 will invest 40 million Euro in the Swedish hedge fund Cevian 2, a Stockholm based fund managed by Cevian Capital. AP1 CEO William af Sandeberg informed of this move in a letter to the stakeholders in the fund’s H1 report.

Since 2003, AP1 has been an investor in Cevian 1, a fund which is not structured as a hedge fund and is soon to be closed to new investors. Cevian 1 has produced an average annual return of 78%, says Sandeberg.

However the investment should not be viewed as part of any overall hedge fund investment strategy. “We are an investor in Cevian’s first fund and have been very happy with the returns so far,” says Sofia Ericsson, Head of Alternatives. “AP1’s investment in Cevian should be viewed as an individual investment decision, not as part of a hedge fund strategy. AP1 does not have a hedge fund strategy and we are not likely to invest in other hedge funds currently.”

The Cevian fund was singled out “because the team has produced very interesting returns in the past and we believe that there is a high probability that their strategy will continue to be successful,” says Ms Ericsson.

AP1’s net assets grew to 188.2 billion SEK in the first half of 2006, a rise of 956 million since the end of 2005. Net investment income comprised 214 million SEK, while capital inflows accounted for 659 million SEK and 83 million SEK came from the transfer of assets from another fund.

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