Good returns in uncertain times

After the very weak market performance in 2022, the year began with some optimism in the financial markets and an even stronger finish.

"The good return that our portfolio has delivered is the result of the year's favourable financial markets and the ongoing management work we conducted during the year. To a significant extent, this is also due to our many years of work to continuously improve the portfolio's return and risk characteristics," says Niklas Ekvall.

"AP4 was founded in 1974 and we can look back at a successful half-century. Today, we conduct professional global management, but up to the pension reform in 2001, AP4 was essentially a pure asset manager of Swedish equities. This strong and long tradition in management of Swedish equities is still essential in our culture with a strong focus on responsible corporate governance. If we extend the time horizon as far as the start of AP4, i.e. 1974, we have delivered an average annual return of 13 per cent over the past 50 years, something we are proud of," says Niklas Ekvall.

“AP4's cost level for 2023 was 0.08 per cent of assets under management. AP4 conducts cost-effective pension management, and in an international cost comparison, AP4's cost level was 37 per cent lower than that of corresponding pension funds internationally,” says Niklas Ekvall.

"AP4's efforts to manage climate risks in the investment portfolio continue to yield results over time. In 2023, the portfolio's carbon dioxide emissions decreased by a further 11 per cent. Since 2010, this decrease has been as much as 65 per cent," says Niklas Ekvall.

"An increasing share of AP4's portfolio consists of investments with a specific focus on the sustainability transition. In 2023, AP4 carried out an extensive project to update our view of key sustainability trends. The ambition is to refine our tools and strengthen our expertise in order to identify investment opportunities that are expected to provide a good return in the long term, while making a tangible contribution to the transition. In 2023, AP4 made new thematic sustainability investments of SEK 7.6 billion, and since 2020 these new investments amount to SEK 36.8 billion," concludes Niklas Ekvall.

Key ratios for AP4’s operations	2023	2022
Fund capital at start of period, SEK bn	460.5	527.6
Net flow to national pension system, SEK bn	-4.8	-4.7
Net result for the year, SEK bn	43.9	-62.5
Fund capital at end of period, SEK bn	499.6	460.5
Return after costs, %	9.6	-11.9
Active return before costs, %	-3.4	-3.8
Annualised return after costs, 5 år, %	8.9	6.9
Annualised return after costs, 10 år, %	8.5	9.2
Asset management costs operating expenses, %	0.06	0.05
Asset management costs, commission expenses, %	0.02	0.03
Total asset management costs, %	0.08	0.08