Diversification of risk
All investments, regardless of the type of securities involved (equities, bonds, etc.), are associated with a certain degree of risk. This risk arises from uncertainty about changes in the value of an investment. An important aspect of asset management is therefore the ability to manage this uncertainty, these risks. By investing in many different securities instead up “putting all its eggs in the same basket”, an asset manager can reduce the total risk in its investments without having to forego their expected returns. Första AP-fonden’s asset management is therefore based on
diversification of risk in many dimensions: markets/sectors, asset classes, investment strategies, time horizons, asset managers. Among other things, it is this risk
diversification that explains why the Fund has allocated a relatively small share of its assets to Swedish investments. The same reasoning lies behind Första AP-fonden’s investments in
emerging markets since the Fund’s inception in 2001.