Sweden’s biggest pension fund Alecta has put its equities chief on leave and announced a plan to reduce risk exposure after reporting $2 billion in investment losses tied to last month’s US banking crisis.
(Bloomberg) — Sweden’s biggest pension fund Alecta has put its equities chief on leave and announced a plan to reduce risk exposure after reporting $2 billion in investment losses tied to last month’s US banking crisis.
On Tuesday, Alecta said it would scale back large stakes in companies far from its home market and named Ann Grevelius as acting head of equity portfolio management. Liselott Ledin, the equities chief responsible for making Alecta one of the largest shareholders in Silicon Valley Bank parent SVB Financial Group, Signature Bank and First Republic Bank, has been placed on leave, according to spokesperson Jacob Lapidus.
Silicon Valley Bank and Signature Bank collapsed as a result of the meltdown, and First Republic Bank is still struggling to survive.
“The losses in the US banks have seriously damaged customers’ trust in Alecta and its equity management,” said Alecta Chief Executive Officer Magnus Billing in a statement. “It’s now up to us to prove that we deserve customers’ trust again,” he said, adding that “Alecta’s equity management needs a fresh start and a new management.”
No other pension fund had bet on the three lenders to the extent that Alecta had. A spokesperson for the fund has since said it does not expect to recover any of its investments in SVB and Signature, and that Alecta has sold its First Republic holding at a loss.
Public Outrage
News of the losses stoked public outrage in Sweden, where Alecta manages the money of 2.6 million private customers. Alecta had recently exited stakes in two local lenders, Svenska Handelsbanken AB and Swedbank AB, and chose to invest in the niche US banks.
While the recent losses won’t affect Alecta’s solvency ratio more than marginally — it still has 1.2 trillion kronor of assets under management — it has prompted a broader reckoning. The fund has launched an internal investigation into its investment processes, is being closely monitored by the government and Riksbank and recently received a summons from the Swedish financial authority.
According to the most recent available data, Alecta’s biggest foreign holding at the end of last year was Microsoft Corp., as the fund had 5.2% of its equity portfolio invested in the company’s stock. Alecta also had 4% of its portfolio in Google parent Alphabet Inc. and 3% in TJX Cos Inc., a budget apparel and home decor retailer.
Ledin, the executive placed on leave, is a 28-year veteran of Alecta, having started at the fund in 1995 as a financial analyst, according to LinkedIn. She has held a number of roles at the company, including portfolio manager and head of equity research.
During her tenure as head of equity portfolio management, a role Ledin assumed in late 2019, she had overseen Alecta’s shift toward allocating more resources into niche banks — positions that had been opened between 2017 and 2019.
Sweden’s pension system allows people to invest some of their pensions into funds of their choosing. If Alecta is perceived to be acting carelessly, Swedes may put their money elsewhere.
Yet so far, there is little evidence to suggest that many people have actually done so. Last week, Alecta won a five-year contract to manage retirement accounts for white-collar workers who don’t actively choose a fund to work with.
–With assistance from Christopher Jungstedt.
(Updates with details about fund response)
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