The Fourth Swedish National Pension Fund (AP4) reports a good return of 10.1 percent after expenses for the full year 2024. With a result of SEK 50.7 billion, fund capital increased to SEK 548.2 billion after SEK 2.0 billion was transferred net to the pension system during the year.
Over the last ten-year period 2015–2024, the return after costs has averaged 8.0 percent per year. Over the last ten-year period, the accumulated result has been almost SEK 313 billion and AP4 has transferred just over SEK 59 billion to the pension system.
– Although 2024 represented a good return for a broad and well-diversified portfolio like AP4’s, the year was also characterized by a one-sided market. A significant portion of 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 of AP4.
– Due to the uncertain economic situation, AP4 has worked intensively for a number of years to increase the diversification and robustness of the portfolio. The ambition has been to maintain the portfolio’s long-term return potential, while offering better protection against the negative scenarios that we have identified. An example of this is the Defensive Equities asset class, designed to provide relatively good characteristics in more challenging economic environments, says Niklas Ekvall.
– In order to fulfill our mission and create the return that the pension system requires in the long term, AP4 has implemented a diversified investment strategy with a fairly large allocation to equities. AP4’s model for managing the fund capital has been successful. However, with an investment strategy that has a broad allocation to equities, it is inevitable that some individual investments will perform poorly, even if the portfolio as a whole has a good return. The alternative would have been to invest the entire fund capital in fixed-income assets with very low risk, but also a significantly lower expected return, says Niklas Ekvall.
At the end of January, the government and the pension group, with broad parliamentary support, announced upcoming changes in the management of buffer capital.
– It is now our mission to implement the proposed change with full force and great commitment in the best way for the pension system, says Niklas Ekvall.
The AP Funds are proud to have delivered high returns that have contributed to strengthening the pension system. The AP Funds have built competent and professional organizations with a strong culture and successful investment processes. The good returns, cost-effectiveness and sustainability work are at the forefront in international comparisons.
– Our starting point during the change will be to build on the strengths and utilize the competencies that have been built up over a long period of time, with the ambition to build an even stronger asset management organization and an even more attractive workplace, concludes Niklas Ekvall.
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