Good return during a turbulent year

The past ten-year period 2015–2024, the return after costs has averaged 8.0 per cent per year. The past ten years, the accumulated net result has been almost SEK 313 billion and AP4 has transferred just over SEK 59 billion net to the pension system.  

"Although 2024 meant a good return for a broad and well-diversified portfolio of AP4's type, the year was also characterised by a one-sided market. A significant part of the capital flowed to the US, resulting in a strong US dollar and a US stock market that outperformed other major stock markets”, says Niklas Ekvall, CEO at AP4. 

"Due to the uncertain economic situation, AP4 has worked intensively for several years to increase the diversification and robustness of the portfolio. The aim of this is to maintain the long-term return potential of the portfolio, while also offering better protection against the negative scenarios we have identified. An example of this is the asset class Defensive Equities, designed to provide relatively good properties in more challenging economic environments," says Niklas Ekvall.  

"In order to fulfil our mission and generate the long-term return that the pension system requires, AP4 has implemented a diversified investment strategy with a fairly large allocation to equities. AP4's asset management model has been successful. However, with an investment strategy that has a broad allocation to equities, it is inevitable that some individual investments will not perform in line with expectations, even if the portfolio in a total generates a good return. The alternative would have been to invest the entire fund capital in fixed income assets which carry very low risk, but also have significantly lower expected returns," says Niklas Ekvall.  

At the end of January, the Swedish government and the pension group, with broad parliamentary support, announced future changes to the management of the buffer capital.  

"It is now our task to implement the proposed change in the best way possible for the pension system, and with full vigour and commitment," says Niklas Ekvall.  

The AP Funds are proud to have delivered high returns that have contributed to strengthen the Swedish pension system. The AP Funds have built up competent, professional organisations that have a strong culture and successful investment processes. The good returns, cost-effectiveness and sustainability work are at the forefront of international comparisons.  

"Our starting point in implementing the change will be to build on the strengths and competencies that have been developed over a long period, with the aim of establishing an even stronger asset management organisation and an even more attractive workplace,” concludes Niklas Ekvall. 

English version of Annual Report 2024 will be published in March.

Key ratios for AP4’s operations	2024	2023
Fund capital at start of period, SEK bn	499.6	460.5
Net flow to national pension system, SEK bn	-2.0	-4.8
Net result for the year, SEK bn	50.7	43.9
Fund capital at end of period, SEK bn	548.2	499.6
Return after costs, %	10.1	9.6
Annualised return after costs, 5 years, %	6.8	8.9
Annualised return after costs, 10 years, %	8.0	8.5
Asset management costs operating expenses, %	0.06	0.06
Asset management costs, commission expenses, %	0.01	0.02
Total asset management costs, %	0.07	0.08