Andra AP-fonden – strong end to a year spent aligning the portfolio to the Paris Agreement

15 February 2021

Thanks to a strong end to 2020, full-year earnings reached SEK 12.8 billion. The average returns of Andra AP-fonden (AP2) in the last five and ten years have been 7.3 and 7.7 per cent respectively. Growth during the year means that the Fund’s return once again exceeds the Fund’s long-term return assumption.

“In many ways, 2020 was a very special year, strongly marked by the COVID-19 pandemic. Yet in spite of everything that has been happening around the world, we have managed to deliver much of what we had decided to do. We have taken key steps to further develop our asset management approach, which we hope and believe will contribute positively to returns and to a more sustainable society,” says Eva Halvarsson, CEO of AP2.

“I am very proud that we adapted our internally managed holdings of global equities and corporate bonds during the autumn to bring them in line with the EU Paris-Aligned Benchmark, without compromising the return and risk characteristics of the portfolios. This alignment of the portfolio is, to our knowledge, unique in that it includes holdings of both corporate bonds and equities,” says Eva Halvarsson.

“Our SEK 12.8 billion profit for the year is a result of developments in the stock market, particularly the Swedish, and also reflects a good return on the Fund’s investments in private equity funds, Chinese equities and real estate. The Fund’s Swedish and Chinese equity portfolios generated a total return of 15.9 per cent and 33.2 per cent respectively,” says Eva Halvarsson.

“The upward trajectory of the global stock market has largely been fuelled by growth equities in the technology sector. This has adversely affected the Fund’s equity portfolios, which avoid concentrating excessive holdings in large companies and instead overweight equities with low valuations. We expect this to generate a better return in relation to risk in the long run. However, it has been negative for us this year,” says Eva Halvarsson.

Source: AP2