“The first half of 2022 was very challenging also from an historic perspective, with considerable market turmoil and not least sharply falling stock markets at the same time that interest rates have risen quickly. This development, of course, has not left AP4’s portfolio unscathed,” comments Niklas Ekvall, CEO of AP4.

“The return for the first half of the year was strongly negative, at -12.6%,” Niklas Ekvall continues. “In this context it must be kept in mind that AP4 is a very long-term investor and trying to make an evaluation of an individual half year is not meaningful. If we stretch out the horizon a bit to also include 2021, AP4’s portfolio has delivered a positive asset management result of SEK 19.1 billion.

“The spring of 2022 will have an obvious place in the history books. Once again, we have a war in Europe with Russia’s full-scale invasion of Ukraine, with enormous suffering for the Ukrainian people. Moreover, we are facing macroeconomic challenges with significantly higher inflation at the same time that economic growth is slowing down.

“AP4 regularly conducts analyses surrounding which asset allocation is best suited in relation to our obligations as a buffer fund for the income pension system. These show that AP4 needs a relatively high share of equities in our asset allocation in order to fulfil our mission in the best way over the long term. However, this means that we also need to be prepared for a situation in which we may have comparatively large fluctuations in our result from one year to another, and also to have a tolerance for large, negative results during individual years. However, as a buffer fund in the income pension system, we have a very long investment horizon and thereby also a good ability to withstand periods of large market movements. This ability to act long-term is a major asset for us during periods of difficult, disorderly and turbulent markets of the type we experienced during the first six months of this year. The fact is that in a long-term perspective, many good investments are done during difficult market conditions rather than in such a strong financial market that we saw at the end of 2021,” concludes Niklas Ekvall, CEO of AP4.

Key ratios for AP4’s operations	30 June 2022	30 June 2021	31Dec 2021
Fund capital at end of period, SEK bn	459.1	489.8	527.6
Net result for the period, SEK bn	-66.6	44.5	85.7
Net flow to national pension system, SEK bn	-2.0	-4.2	-7.5
Asset management costs, operating expenses, full year basis, %	0.05	0.06	0.05
Asset management costs, commission expenses, full year basis, %	0.03	0.03	0.03
Total asset management costs, full year basis, %	0.08	0.09	0.08
Return, total portfolio, before costs, %	-12.6	10.0	19.3
Return, total portfolio, after costs, %	-12.6	9.9	19.2
Real return after costs, % 1	-16.5	8.8	15.3
Annualised return after costs, 5 years, %	7.5	11.5	11.6
Annualised return after costs, 10 years, %	9.7	10.6	11.8
Currency exposure, %	19.9	21.0	20.9

¹ The CPI for June 2022 is an estimate, since this figure was not yet available at the time of publication of the interim report.