AP Fonden-7, the Swedish state pension scheme, has put on watch two $100m (€83m) funds of hedge fund mandates, run by EIM and K2 Advisors, as a result of investment underperformance.

Svante Linder, head of fund administration at AP7, said the two firms' mandates will be monitored more closely during the year, with the possibility of being dropped at short notice, and given thorough reconsideration in a year's time.