The Swedish pension group caught up in the fallout of Silicon Valley Bank this spring suffered losses in the portion of its portfolio exposed to European real estate.
Alecta, the country's biggest pension fund with 1.2 trillion Swedish kronor ($110 billion) of assets, said its alternatives portfolio — of which real estate is a major component — made a loss of 0.8% in the first nine months of the year, according to emailed comments. The portfolio was up 0.1% in the third quarter, however.
Pensions funds such as Alecta have in recent years boosted their portfolio allocation to real assets, such as infrastructure and property, as they sought out yield in the era of zero interest rates. But amid surging borrowing costs and falling valuations, many of those holdings are now facing write-downs.
The losses in the first nine months reflect in part the fund's 49 billion kronor bet on heavily indebted landlord Heimstaden Bostad. That holding, along with its stakes in three defunct banks in the U.S., is currently the subject of two separate investigations by Sweden's financial watchdog.
The Stockholm-based pension fund has remained the spotlight after it incurred $2 billion in losses from three failed bets tied to the collapse of Silicon Valley Bank in the U.S. The debacle, which led to the ousting of the chief executive officer and equities boss, prompted an outcry in Sweden — where the fund oversees the retirement savings of a quarter of the population.
The pressure has continued to mount after the fund's new chief executive, Peder Hasslev, told local media that the investment in Heimstaden Bostad — in which Alecta is a 38% shareholder — should never have been made.
"Alecta has received a return on the investment in Heimstaden Bostad, but not enough payment for the risk we took, and there are also question marks regarding whether we have reasonable influence," according to a statement earlier this month.
The public scrutiny of yet another potential misstep also prompted the recent departure of Alecta's Chair Ingrid Bonde, who said there had been too much focus on her as a person.
Landlord Heimstaden Bostad — rated two steps above junk with a negative outlook at Standard & Poor's — reports earnings on Oct. 24.
In terms of the performance in its equities portfolio, the group reported a loss of 4.8% during the third quarter but a 6% gain for the first nine months of the year.
In a separate statement, Alecta said that returns on its defined-contribution pension plan totaled 3.5% for the first nine months of 2023, better than the 13.1% loss for the same period a year earlier. Its solvency ratio stood at 212% compared to 214% a year ago.
