Through the course of the last year, AP3, the SEK345.2 billion ($42.2 billion) Third Swedish National Pension Fund, scaled back on hedge funds and boosted its internal portfolio construction capabilities. The fund also continued steadily building its alternatives portfolio, where chief investment officer Mårten Lindeborg sees a stronger risk/return ratio than in equity. But it was the fund’s absolute return strategies – accounting for 4 per cent of assets under management and encompassing internal and external hedge funds plus risk premium strategies – that underwent the most change last year.