Sweden's biggest pension firm cuts stocks on inflation concern

The specter of accelerating inflation is prompting the biggest pension manager in Sweden to cut its holdings of stocks and bonds.

Alecta's chief investment officer Hans Sterte | Photo: PR / Alecta

Alecta, which manages USD 130bn, is instead boosting exposure to alternative assets such as infrastructure projects and residential housing in an effort to preserve returns.

"Longer term we may see rising inflation and that is one of the reasons we are switching the portfolio towards more real assets," the firm's chief investment officer Hans Sterte said in an interview.

In Alecta's home market of Sweden, calls of excessive valuations are getting louder with the benchmark stock index up about 30 percent so far this year.

Listed markets are "priced for perfection" and "everything is very expensive," Sterte said.

His comments echo concerns from other high profile investors such as the chief executive of Norway's USD 1.4tn sovereign wealth fund and Scion Asset Management's Michael Burry, who has drawn parallels between economic policy today and Germany's during hyperinflation in the 1920s.

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