Returns of 3.8% after costs helped Sweden’s AP4 fund grow total assets to SEK366.9bn (€35.5bn) by the end of the first half of 2018, the buffer fund’s latest results announcement shows.
The fund’s “net result” as reported hit SEK13.7bn, while “net disbursements to the pension system” hit SEK3.3bn.
Total assets reported at the same time last year stood at SEK347.6bn – meaning the fund has increased assets by some SEK19.3bn over the past 12 months.
Niklas Ekvall, CEO (pictured), described the latest half year results as “satisfactory”, but more importantly stressed that the returns made were in large part due to reliance on active management.
“It is gratifying that our active management continues to deliver an excess return in relation to the reference index that guides our long-term asset allocation. This excess return was 1.4 percentage points during the first half of 2018 and thereby accounts for a considerable share of AP4’s total return. Essentially all parts of our asset management have made a positive contribution to the active return, with Swedish equities as the dominant area.”
Costs at AP4 are strictly controlled. The fund reported that total costs amounted to 0.10 % of average fund capital. Operating expenses amounted to 0.06 % and commission expenses amounted to 0.04 %. That cost level “was 65% lower than for a selection of international pension funds in an independent survey conducted by CEM Benchmarking,” the fund stated.
In other developments, and as reported by InvestmentEurope previously, AP4 has started to adopt a new approach to sustainability and reducing the carbon footprint of its portfolio. Ekvall cited “several projects involving both sustainability analyses and sustainability investments”.
The AP funds system is also set to undergo changes in response to changes in the rules governing their activities, which are set by the Swedish Parliament. The first changes are set to take effect on 1 January 2019, and are intended to adjust the investment rules. Ekvall said the modernisation of the investment rules would facilitate cost-effective asset management. Sweden does have a general election in September, however, which would lead to other changes depending on which parties take a significant share of parliamentary seats under the proportional representation system used.