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Swedish pension fund takes chunk of pandemic bond

Third Swedish National Pension Fund (AP3) has confirmed it was a lead investor in the World Bank's pandemic cat bond.

The World Bank launched the $320mn bond in June as part of an insurance facility created to provide immediate funding to developing countries facing the risk of a pandemic.

Financing will be triggered when an outbreak reaches an agreed level, which is based on number of deaths, the speed of the spread of the disease and whether the disease crosses international borders.

Pension funds picked up notes in the higher-risk class B layer, taking 42 percent of the total, according to information previously released by the World Bank.

AP3 recorded positive growth for the first six months of this year in its H1 2017 report.

"Our net result of 17.5bn [Swedish] kronor ($2.2bn) for the first six months of the year was a strong performance, driven primarily by returns on equities and our Swedish real estate holdings," AP3 CEO Kerstin Hessius said.

"We continued to build our investments in green bonds, which now account for 13 percent of the fixed income portfolio," she added.

Total returns were reported to be 5.4 percent after expenses for the first half of 2017. This was up significantly from the 1.4 percent that it reported for the same period of last year, and brought the five-year annual average up to 11.1 percent.

AP3 also reported that fund capital had increased by 13.8bn kronor to 324.4bn kronor by 30 June.

The pension fund's insurance-linked securities (ILS) portfolio grew by more than 40 percent in the second half of 2016 to reach 2.95bn kronor, it revealed in its last full-year report. It did not provide a breakdown of ILS holdings in its most recent half-yearly report.


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