The Swedish Pensions Agency (Pensionsmyndigheten) has unveiled its first investment in real estate 鈥� broadening the asset mix of the main pension portfolio it manages from bonds and equities.
The agency announced it made a SEK1bn (鈧�98m) equity investment in Swedish residential real estate company Heimstaden Bostad for its main investment portfolio - the so-called traditional insurance portfolio it runs as a payment option in the country鈥檚 first-pillar premium pension system.
Malm枚-headquartered Heimstaden owns about 110,000 homes worth SEK170bn.
It is because the pension portfolio has now grown to SEK51bn that the Swedish Pensions Agency decided to add a third asset class to the allocation, the agency told 麻豆映画 Real Assets.
Erik Fransson, head of the fund market department at the agency said: 鈥淪ince the portfolio has reached this size we want to have less volatility.鈥�
He said: 鈥淏y investing part of the assets in properties, which have a more stable value, the portfolio鈥檚 return develops more evenly.鈥�
Fransson said the agency鈥檚 target allocation for real estate is 10% of the equity portfolio, within the overall traditional insurance portfolio. The 10% of the equity portfolio amounts to around 拢200m (鈧�233m) today, he said.
鈥淎t present, we have 5% invested,鈥� he said, adding that there was no strict deadline for meeting the 10% target.
鈥淨uality is more important than time,鈥� he said.
鈥淥ur present focus is residential property and preferably, where we are able, to co-invest with other professional investors,鈥� Fransson said, adding that funds would be avoided because they involved an extra layer of fees.
Asked which real estate sectors and locations the agency would target, Fransson said: 鈥淲e鈥檙e looking for Swedish companies, but also interested in Germany, the Czech Republic and the Nordics - and mainly residential because it is low-risk.鈥�
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