Swedish occupational pensions giant Alecta reported a 7.7% return for the first half of this year today, as it remains mired in uncertainty as the Swedish Financial Supervisory Authority (FSA) decides whether to escalate a probe around rule breaking.
The SEK1.31trn (€115bn) pension fund – the Nordic country’s largest – said in the interim report statement that it was still working on improving its governance, risk management and culture.
Peder Hasslev, Alecta’s chief executive officer, said: “We have worked intensively on developing and implementing improvement measures to strengthen Alecta, while at the same time the ongoing operations continued to deliver with high quality for the benefit of the customers.”
During the first half of 2024, the return had been “competitive”, he said.
The main return figure for Alecta is 7.7% for the first half – the return on its defined contribution Alecta Optimal Pension product.
Total assets increased to SEK1.31trn by the end of June from SEK1.24trn at the end of December.
The company said it had “continued to work on the improvements in governance, risk management as well as competence and culture that we initiated in 2023 due to the losses in the American banks and the question marks surrounding the investments in Heimstaden Bostad”.
Back in April, representatives of Alecta’s labour-market owners decided on a new governance model.
Alecta said it was now working through the opinion letter it received earlier this summer from the FSA, which gave a preliminary assessment in its investigation into the high-profile investment failures that the firm had broken regulations.
Alecta said it was currently formulating its response to this. It has until 6 September to do so.
The Stockholm-based institution – which is now under new leadership following disastrous revelations in 2023 of losses on US bank investments and its stake in Swedish residential property firm Heimstaden Bostad – said the first half of 2024 “has been marked by the events in 2023 that damaged confidence in us”.
Alecta said its positive first-half return was largely attributable to the robust development of its equity portfolio, which produced 12.9% return during the first half of the year.
But the bond market had been volatile during the period, it said, with rising long-term interest rates in Europe and the US.
“Overall, the development has led to a fixed income yield of around zero for Alecta Optimal Pension and slightly negative for the defined benefit portfolio,” it said.
“Our alternative investments have also been affected by interest-rate trends,” Alecta said, adding that the market expectation of lower short-term interest rates meant sentiment on the real estate market had gradually improved.
Alecta’s real estate and other alternative investments had developed positively overall in the first half, it noted, with those assets having yielded 1.8%.
“The value of Alecta’s holdings in Heimstaden Bostad rose by 3.9% during the period and now amount to SEK39.2bn,” the firm said.
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