Sweden eases investment law for AP funds

The new regulation permits investing up to 40% in illiquid investments, instead of the 5% cap on unlisted investments that is currently in place for the country's pension funds: AP1, AP2, AP3 and AP4.

Other changes include lowering the minimum requirement for fixed income from 30% to 20% of the portfolio, and introducing sustainability requirements into the law.

"The AP funds should manage assets in an exemplary way, make responsible investments and be a responsible owner," Tobias Fransson, head of strategy and sustainability at AP4 told Unquote. "This is clearly a higher ambition level than present wording. We feel that the AP funds are at the forefront when it comes to ESG, but we will have to continue to improve in order to fulfil the requirements of the law."

The new regulation will be effective from January 2019, though there are plans for a second step to be implemented by July 2019.

The second step includes the ability to make direct investments in unlisted asset classes, including private equity, infrastructure and private debt. Currently the main route is fund investments only.

"The outcome of this will be important for the long-term strategy and allocation of the AP4 portfolio. Direct investments will enable long-term and cost-efficient unlisted investments," said Fransson.

AP4 has invested 1% of its portfolio to private equity as of June 2018; some of its recent commitments include Accent Equity 2017, EQT Infrastructure III, and EQT Credit III.

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• Topics
• LPs
• Nordics
• Sweden
• Responsible Investment
• ESG
• AP funds