Favourable return as the world transitions from crisis to restart
The Fourth Swedish National Pension Fund’s (AP4) return for the first half of 2021 was 10.0 before costs, and 9.9% after costs. AP4’s total fund capital as per 30 June 2021 was SEK 489.8 billion, compared with SEK 449.4 billion at the start of the year. The result for the first half of 2021 was SEK 44.5 billion. During the same period, net payments from AP4 to the pension system totalled SEK 4.2 billion. The portfolio’s active return during the first half of the year was higher than the return for AP4’s benchmark portfolio, by 0.8 percentage points. Currency exposure at the end of the period was 21.0% of fund capital, which was unchanged since the beginning of the year.
“AP4’s asset portfolio generated a favourable return of 9.9% during the first half of 2021 after costs following an equally solid return of 9.6% for the full year 2020. These are historically favourable returns, but they should also be viewed against the background of the massive financial and monetary policy stimulus measures that were introduced across a broad front in 2020 and early 2021,” comments Niklas Ekvall, CEO of AP4.
“Hopefully the world is now successively emerging from the most acute part of the Covid-19 pandemic. In the uncertain environment that is still prevailing it is natural that actors in the financial market are having a hard time determining what type of cycle the world economy is heading into. A tug of war is currently in progress where the hope for a prolonged period of strong economic growth is on the one side and concerns about bottlenecks and rising inflation are on the other. This tug of war will likely result in an uncertain market environment going forward. We should also expect to see lower returns on financial assets in the coming years compared to what we have seen in the last ten years," says Niklas Ekvall.
“We are continuously developing our work on integrating sustainability in our investment activities, and one such area is thematic sustainability investments, where we are working systematically and proactively to identify investments that can generate favourable returns to the pension system while at the same time significantly contributing to the climate transition. During 2020 and the first half of 2021 AP4 made new investments in sustainable infrastructure, renewable energy and other parts of the energy transitionof approximately SEK 10 billion,” concludes Niklas Ekvall.
Key ratios for AP4’s operations |
30 June 2021 |
30 June 2020 |
2020 |
Fund capital at start of period, SEK bn |
449.4 |
418.0 |
418.0 |
Net result for the period, SEK bn |
44.5 |
-10.6 |
39.3 |
Net flow to national pension system, SEK bn |
-4.2 |
-4.2 |
-7.9 |
Fund capital at end of period, SEK bn |
489.8 |
403.2 |
449.4 |
Asset management costs, operating expenses, % (annualised) |
0.06 |
0.06 |
0.06 |
Asset management costs, commission expenses, % (annualised) |
0.03 |
0.03 |
0.03 |
Total asset management costs, % (annualised) |
0.09 |
0.09 |
0.09 |
Return, total portfolio, before costs, % |
10.0 |
-2.5 |
9.7 |
Return, total portfolio, after costs, % |
9.9 |
-2.5 |
9.6 |
Real return after costs, %1 |
8.8 |
-1.6 |
9.1 |
Annualised return after costs, 5 years, % |
11.5 |
7.4 |
9.8 |
Annualised return after costs, 10 years, % |
10.6 |
9.5 |
9.7 |
1 The CPI for June 2021 is an estimate, since this figure was not yet available at the time of publication of the interim report.
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About Fjärde AP-fonden
AP4’s mission is to contribute to the financial security of current and future pensioners in Sweden by managing part of the national pension system’s buffer capital. AP4’s long-term perspective, responsibility as an owner and strong commitment to sustainability create opportunities for high returns at a low cost. In this way AP4 works for more secure pensions.
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Latest releases from Fjärde AP-fonden
A turbulent and challenging first half of 202212.7.2022 16:30:00 CEST | Press release
The Fourth Swedish National Pension Fund’s (AP4’s) return for the first half of 2022 was -12.6% after costs. AP4’s fund capital as per 30 June 2022 amounted to SEK 459.1 billion, compared with SEK 527.6 billion at the start of the year. The result for the first half of the year was SEK -66.6 billion. During the same period, a net total of SEK 2.0 billion was paid by AP4 to the pension system. The portfolio’s active return during the first half of the year was -2.3 percent.
Ett turbulent och utmanande första halvår 202212.7.2022 16:30:00 CEST | Pressmeddelande
Fjärde AP-fondens (AP4) avkastning för första halvåret 2022 uppgick till -12,6 procent efter kostnader. AP4:s fondkapital uppgick per sista juni 2022 till 459,1 miljarder kronor, att jämföra med 527,6 miljarder kronor vid årets början. Resultatet för första halvåret blev -66,6 miljarder kronor. Under samma period betalades netto 2,0 miljarder kronor från AP4 till pensionssystemet. Portföljens aktiva avkastning under första halvåret var -2,3 procent.
AP1, AP2, AP3 and AP4 post record profits of SEK 316 billion in 202124.2.2022 09:30:00 CET | Press release
Together, the AP Funds (AP1-AP4) achieved their best result ever of SEK 316 billion. This significantly contributes to the stability of the income pension system and the mission to be of the greatest possible benefit to current and future pensioners.
Första, Andra, Tredje och Fjärde AP-fondens rekordresultat för 2021 uppgick till 316 miljarder kronor24.2.2022 09:30:00 CET | Pressmeddelande
AP-fonderna skapar tillsammans det bästa resultatet någonsin på 316 miljarder kronor. Detta bidrar starkt till inkomstpensionssystemets stabilitet och uppdraget att vara till största möjliga nytta för dagens och morgondagens pensionärer.
Very good return for AP4 against the background of strong economic recovery23.2.2022 07:00:00 CET | Press release
The Fourth Swedish National Pension Fund’s (AP4’s) return for the full year 2021 was 19.2% after costs, and the net result for the year was SEK 85.7 billion. This is the highest result ever achieved since AP4 began operating in 1974. Active management continued to be successful and contributed 3.5 percentage points to the return, corresponding to SEK 15.2 billion in 2021. After net transfers of SEK 7.5 billion to the pension system during the year, fund capital increased to SEK 527.6 billion at year-end 2021. AP4’s carbon emissions for the listed equity portfolio decreased by an additional 23% during the year.
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