External management

At 31 December 2010, 43.7 percent of the Fund’s total net assets were under external management. This is equal to an increase of around 1 percentage point over the previous year. A total of SEK 95.5 billion was managed externally.

Listed assets

Of total assets under external management, SEK 78.4 was invested in listed assets, divided among six different mandates:

  • US equities (large and small caps)
  • Japanese equities (large caps)
  • Pacific equities excluding Japan (large caps)
  • Emerging market equities
  • US corporate bonds, and
  • European corporate bonds

The six mandates are divided between 11 managers and 15 different management mandates. The external management unit has continued working in line with the Fund’s increased focus on strategic asset allocation. External management has shifted from a multi-manager approach targeting diversification and generation of excess returns to fewer managers with either basic or specialist mandates (core-satellite management).

Activities during the year were focused on efforts to concentrate the number of mandates in emerging markets, where three mandates were withdrawn. As a result of asset allocation and changes among managers, two mandates were terminated in Japan.

External management mandates, 31 December 2010
Listed assets,
Market SEK bn Starting date

BlackRock North America, large caps 35.1 Jan 01
Hillswick¹ North America, large caps 0.3 Dec 09
BlackRock¹ North America, small caps 2.3 Nov 09
Champlain¹ North America, small caps 0.9 Nov 09
Ironbridge North America, small caps 0.8 Apr 04
JP Morgan REI Pacific³ 2.3 Sep 08
Treasury Asia Pacific 1.2 Sep 08
Capital International Pacific 1.7 Dec 03
Lloyd George Pacific 1.7 Apr 04
Marathon Japan 1.9 Oct 07
Aberdeen Emerging markets 3.6 Jun 06
Emerging Markets Mgmt Emerging markets 0.5 Jun 06
BlackRock Emerging markets 14.6 Jun 06
Total equities
Fixed income

BlackRock2 Corporate bonds, USA 7.7 Oct 99
BlackRock Corporate bonds, Europe 4.0 Jul 08
Total external management, listed assets
¹Most recent procurement.
²BlackRock Inc.’s mandate commenced in October 1999, i.e. prior to reorganization of the national pension funds. Första AP-fonden allowed the mandate to continue under the new management that was started on 1 January 2001 and expanded in 2003.
³According to the definition used by the Fund, the Pacific region consists of Australia, New Zealand, Singapore, Hong Kong and Japan. In certain mandates, Japan is reported separately.
Largest foreign equity holdings, 31 December 2010
Company Market value,
% of net assets
Exxon Mobil Corp 962 0.4
Apple Inc 761 0.4
Microsoft Corp 562 0.3
General Electric 505 0.2
IBM 487 0.2

Alternative investments

The Fund’s alternative investments consist of predominantly unlisted assets with low liquidity. These include real estate, private equity funds, hedge funds and opportunity investments.

The total value of the Fund’s alternative investments at 31 December 2010 was SEK 17.3 billion, which is equal to 7.9 percent of the total portfolio. Overall, the Fund’s alternative investments returned 13.8 percent during the year. Measured in local currency, i.e. without foreign exchange effects, return was 19.3 percent. The largest contribution to return comes from the Fund’s real estate investments, which make up the bulk of alternative investments and have generated high returns. Annualized return on alternative investments over the past five years was 12 percent.

Real estate

The real estate market showed very strong development during the year. The market value of the Fund’s real estate investments at 31 December 2010 was SEK 11.0 billion. This represents a net increase of SEK 4.3 billion, of which SEK 3.2 billion is attributable to new investments and SEK 1.1 billion to value appreciation. The new investments consist partly of a global investment mandate for real estate equities and partly of the acquisition of residential properties in the newly established and wholly owned real estate company Willhem AB. Första AP-fonden owns 25 percent of Vasakronan, while the remaining 75 percent is owned in equal parts by the Second, Third and Fourth AP funds. Vasakronan’s focus is on long-term management of commercial properties in Swedish growth markets. The Fund’s investment in Vasakronan had a market value of SEK 7.0 billion at year-end 2010 and returned 24.7 percent during the year. Over the past five years, the investment in Vasakronan has produced an annualized return of 15 percent.

At the end of 2010 some 220 properties were acquired in the real estate company Willhem AB. These properties consist of more than 11,000 rental apartments in the Swedish cities of Stockholm, Gothenburg, Malmö, Jönköping, Borås, Karlstad and Linköping with an underlying property value of over SEK 7 billion. The transaction included a total of around 860,000 square meters of real estate, of which 87 percent is residential. Willhem AB is wholly owned by Första AP-fonden.

Private equity funds

The Fund's Strategy for private equity investments is to invest with the most experienced and professional managers. The portfolio of private equity funds consists mainly of partnerships with fund-of-funds participants with customized mandates. There are also a few direct fund holdings. The fund-of-funds program consists of investments in private equity funds globally, in North America, in Europe, and since 2010 also in Asia. In 2010 the Fund extended the investment period in its existing private equity program and thereby increased its investment commitment by SEK 1.8 billion during the year. The direct funds invest in early stage Nordic companies in the telecom, communication and life science sectors.

Development in the private equity market was positive during 2010, with a growing business volume and a modest negative return. Return in 2010 was -1.1 percent, measured in SEK, which is a result of cautious valuation and foreign exchange effects. Return in local currency, without foreign exchange effects, was positive. It is not meaningful to calculate multi-year returns, since few corporate transactions have been executed.

Första AP-fonden’s goal for its private equity investments is to achieve a long-term return in excess of the MSCI World Index +4 percentage points (after expenses).

Hedge funds

The investments in hedge funds at year-end 2010 consisted of one holding, Cevian Capital II. Cevian is a so-called activist fund that acquires significant minority ownership positions in undervalued listed companies in Northern Europe. Return in 2010 was 24.2 percent. Over the past five years, the investments have produced an annualized return of 16 percent.

Opportunity investments

In the past two years Första AP-Fonden has taken advantage of investment opportunities arising in the financial markets in the wake of the financial crisis of 2008, so-called opportunity investments, all of which are fixed income- and credit-related. In 2010 new investments were made in a Swedish debenture, an American bond fund and an Indian bond fund. In addition, the Fund concluded its investment in an American bond fund with good return. The year’s return was 12.7 percent, measured in SEK.

Management mandates in alternative investments, 31 December 2010




Total commitment, millions¹
Invested amount, millions¹ Starting date
Private equity funds

Innkap 3 Partners InnovationsKapital Nordic EUR 69 64 2004
Innkap 4 Partners InnovationsKapital Nordic EUR 108 68 2006
First Private Equity Investments LGT Europe EUR 3,246 1,491 2006
First II Private Equity Investments LGT Europe, Asia EUR 830 180 2010
WP North America Private Equity WP Partners North America USD 3,159 1,490 2006
WP North America Private Equity II WP Partners North America USD 672 72 2010
First Stockholm Global Private Equity Hamilton Lane Global USD 269 235 2010
Second Stockholm Global Private Equity Hamilton Lane Global USD 1,815 773 2006
Third Stockholm Global Private Equity Hamilton Lane Global USD 269 44 2010
Hedge funds

Cevian Capital II Cevian Capital Northern Europe EUR 361 361 2006
Opportunity investments

BlackRock Public Private Investment Fund BlackRock North America USD 672 514 2009
Nektar Special Opportunity Brummer & Partners Global SEK 250 250 2009
EW Special Opportunites Fund Edelweiss Capital India USD 269 111 2010
Oaktree Opportunities Fund VIII Oaktree Capital Mgmt North America USD 67 33 2010
Oaktree Opportunities Fund VIIIb Oaktree Capital Mgmt North America USD 134 0 2011
¹ Local currency.
Net contribution from external management, unlisted assets (excl. real estate), SEK m

Unlisted assets
Gross income: dividends, realized and unrealized value gains/losses 157
Paid management fees recognized as part of net result -33
Paid management fees recognized as commission costs -9
Net contribution 115

Net assets under management, 31 December 2010¹ 4,995
Invested volume, 31 December 2010¹ 4,889
Remaining investment commitments, 31 December 2010¹ 6,178
¹ Calculated at the closing day rate.
Första AP-fonden logo