SWEDEN – AP2, the second national Swedish pension fund, recorded a 15.3% decline in its assets for the year to the end of December 2002 to 117.1 billion kronor (12.8 billion euros) – though it remains determined to pursue its long-term investment strategy “all the way”.

Its assets declined to 117.1 billion kronor (12.8 billion euros), down from 133.5 billion kroner (14.55 billion euros) at the start of the year. It also reported a net inflow of five billion kronor over the year.

The losses were attributed to stock market falls around the world in 2002. The fund has around 20% of its assets on the Stockholm Stock Exchange, whose SBX index fell by around 38.6% over the period.

"It is naturally deeply dissatisfying to have to report such a sharply negative result," said AP2’s chief executive Lars Idermark. "Nevertheless, our investment strategy is extremely long-term, and we are therefore determined to pursue it all the way.”

He said AP2’s portfolio would continue to consist of approximately 60% equities and 40% fixed-income instruments.

“All analyses indicate that this composition promises the best return when operating with an investment horizon of between 10 to 15 years," Idermark added.

The fund said that 80% of its 22.8 billion kronor portfolio of Swedish equities was actively managed, with the remainder being managed passively against the index.

Its 46.1 billion kronor foreign equity portfolio declined 24.9%, compared to a 27.0% fall in its benchmark, a regionally adjusted MSCI World Index.

The value of AP2’s fixed income assets declined to 42.2 billion kronor of 46.3 billion kronor.

AP2 is the first of Sweden’s so-called buffer funds to report its returns for 2002. AP3 is expected on February 12 with AP1 due on February 19.