Swedish occupational pensions provider Alecta has reported a steep increase in investment returns in the first quarter, driven in particular by its focus on Swedish and European equities.

The return on defined contribution pensions, Alecta’s Optimal Pension product, rose to 11.1% in the January to March period, from 3.1% in the same period last year.

Meanwhile, defined benefit pensions returned 7.8%, up from 2.8% in the first quarter of 2014.

Per Frennberg, CIO, told IPE: “Our portfolio did well this quarter, and, market-wise, we are focused more on Europe and Sweden than others.”

Equity performance had been in the right place, with listed equities generating a return of 15.3% between the beginning of January and the end of March.

Fixed income performed well over the three-month period as well, Frennberg said.

He added that Alecta was satisfied with its low cost level.

Group management costs on a rolling 12-month basis fell to 0.10% from 0.12%, it reported.

“The portfolio is fully active, even across fixed income, and we do that in-house at very low cost – and, so far, with very good returns,” Frennberg said.

He said costs could be kept low because of the economies of scale possible with the high level of capital Alecta manages.

Rather than add more staff as the value of the portfolio grows, the organisation has opted to keep relative costs low.

The group solvency ratio was unchanged at 164, while collective funding for defined benefit pensions rose to 148 from 147.

Alecta had group assets under management of SEK682bn (€73.4bn) at the end of last year.