Lede

Sweden's biggest pension fund, Alecta, has announced plans to reduce risk exposure after reporting $2 billion in investment losses linked to last month's US banking crisis, leading to the equities chief being placed on leave.

Summary

• Alecta, Sweden's largest pension fund, has put its equities chief, Liselott Ledin, on leave after reporting $2 billion in investment losses due to the recent US banking crisis.
• The pension fund plans to scale back large stakes in companies far from its home market and has named Ann Grevelius as acting head of equity portfolio management.
• No other pension fund had bet on the three US lenders to the extent that Alecta had, with Silicon Valley Bank and Signature Bank collapsing as a result of the crisis and First Republic Bank still struggling to survive.
• 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.
• Alecta has launched an internal investigation into its investment processes and is being closely monitored by the government and Riksbank.
• While the recent losses will not affect Alecta's solvency ratio more than marginally, it has prompted a broader reckoning.
• Alecta's biggest foreign holding at the end of last year was Microsoft, with 5.2% of its equity portfolio invested in the company's stock.
• Ledin, the executive placed on leave, is a 28-year veteran of Alecta and had overseen Alecta's shift toward allocating more resources into niche banks.
• Sweden's pension system allows people to invest some of their pensions into funds of their choosing, and if Alecta is perceived to be acting carelessly, Swedes may put their money elsewhere.
• 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.