- Advertisement -
- Advertisement -

Related

Ericsson Pensionsstiftelse Adds Long-Only Managers

Industry Report

- Advertisement -

Stockholm (HedgeNordic) –  Ericsson Pensionsstiftelse (EPS), a Stockholm-based SEK 21 billion ($2.3 billion) pension fund covering Ericsson employees, is breaking with its strategy of the past five years and is adding active long-only managers to its equity allocation, an exposé of the fund’s current strategy by Sarah Rundell in top1000funds.com reveals.

“We haven’t used long-only managers in equity recently because we saw the stock market as a beta market,” EPS CIO Christer Franzén told the publication. “Now, however, because the market is so expensive and future returns are probably low from here, we assume there will be a greater disposition within the indices.”

EPS is set to use a concentrated portfolio of 30-50 shares in working with external managers, as opposed to the usual 100, favoring active managers to seek out alpha in less conventional places. The fund has also recently been focusing on cash-generating investments rather than capital gains, with its strategy focused on lowering portfolio volatility and achieving a higher Sharpe ratio. The fund prices in a risk-factor model based on classic asset liability management, studying potential five-year returns across all asset classes.

The fund’s current allocation is 35% in fixed income, 15% in credit, 20% in real estate and infrastructure, 10% in alternatives and 20% in equities. It has lowered return targets and divested from emerging markets in recent years, though it has started to look at these selectively again.

Traditional hedge fund strategies are “just another way of expressing an active and flexible approach, rather than being a separate asset class,” Franzén explained. “Returns from equities are normally, over time, the risk-free rate including inflation plus 4 per cent. This is more a common target for many hedge funds these days; if higher returns are needed, leverage will be involved.”

“Hedge fund fees are generally lower in Sweden compared with, say, London, where the 2/20 fee structure has been the standard, even though it’s starting to change now,” he added.

Franzén, though, remains wary of hiring too many external managers and consultants. EPS is down to 20 managers on its roster from an original stable of 35, and manages 40% of its assets in-house, mainly in fixed income and equity derivatives.

“We need to be able to take care of our own fixed-income risk,” he said. “My background is as a fixed-income trader, so anything on the macro front we are good at. In the equity allocation, we use derivatives as an overlay and are active if the markets give us the opportunity.”

 

 Picture: (c) Vintage Tone—shutterstock.com

Subscribe to HedgeBrev, HedgeNordic’s weekly newsletter, and never miss the latest news!

Our newsletter is sent once a week, every Friday.

Glenn Leaper, PhD
Glenn Leaper, PhD
Glenn W. Leaper, Associate Editor and Political Risk Analyst with Nordic Business Media AB, completed his Ph.D. in Politics and Critical Theory from Royal Holloway, University of London in 2015. He is involved with a number of initiatives, including political research, communications consulting (speechwriting), journalism and writing his post-doctoral book. Glenn has an international background spanning the UK, France, Austria, Spain, Belgium and his native Denmark. He holds an MA in English and a BA in International Relations.

Latest Articles

Formue Highlights Private Credit’s Role in New Economic Era

Nordic wealth manager Formue has long prided itself on delivering institutional-grade investment solutions to high-net-worth individuals. As global economic conditions shift, Formue sees an important role...

Chelonia Select Builds on Solid 2024

Stock-picking hedge fund Chelonia Select is off to a strong start in 2025 with an 8.3 percent gain through the end of May, building...

CABA Capital Expands the Flex Series

Danish fixed-income boutique CABA Capital has launched the third vintage of its leveraged, closed-end fixed income strategy: CABA Flex3. The fund aims to deliver...

Aegon AM Launches Capital Call Finance Fund

Aegon Asset Management has launched the Aegon Capital Call Finance Fund, providing institutional investors with access to the capital call finance market – a...

Evli’s Co-Investment Strategy: Opening the Door to Direct Private Equity Deals

Co-investing alongside private equity funds has become increasingly important for institutional investors seeking greater control, reduced fees, and selective deal exposure. Once reserved for...

From Loans to Layers: Navigating the CLO Capital Stack

Collateralized Loan Obligations (CLOs) play an important role in credit markets by bridging the capital needs of corporate borrowers with the return objectives of...

Allocator Interviews

In-Depth: High Yield

Voices

Request for Proposal

- Advertisement -
HedgeNordic
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.