Sweden’s Alecta reported returns of 7.7% in its flagship defined contribution pension fund for the first six months of the year, buoyed by what it called “strong developments” across its share portfolio.
The fund also struck an upbeat tone on the value of its holding in Swedish landlord Heimstaden Bostad, which rose by 3.9% to 39.2 billion kronor ($3.8 billion) in the first half of the year. Alecta had written down its stake several times as the commercial property sector struggled to manage its debt loads amid falling valuations and sharply higher interest rates.
“The value development for Alecta’s properties and other alternative investments has overall developed positively during the first half of the year and yielded 1.8%,” the fund said in a statement on Aug. 20.
Still, the Stockholm-based pension fund has major hurdles to overcome in the coming months. Its 39% stake in Heimstaden is subject to a criminal investigation as well as a probe by Sweden’s Financial Supervisory Authority. The fund says it has until Sept. 6 to respond to the FSA’s latest findings.
Alecta “believes that the shareholder agreement regarding Heimstaden Bostad is unbalanced to its disadvantage,” it said. While the fund remains focused on improving this, it added, “no change has been achieved during the period.”
That property bet — as well as the roughly $2 billion it lost on niche lenders during a U.S.-based banking crisis — prompted Alecta to part ways with much of executive team last year and to appoint four new members to its board. A permanent chairman has yet to be named.
“We have worked intensively on developing and implementing improvement measures to strengthen Alecta,” Chief Executive Officer Peder Hasslev said in the statement.
