Sweden’s AP1 reported a 9.7% return on investments for last year, higher than the 2017 gains produced by the three other main buffer funds for the country’s state pension system.

The return before costs was a marginal improvement on the 9.5% return AP1 produced in 2016 on the same basis, according to the pension fund’s annual report.

After costs, the return was 9.6% in 2017, it reported.

AP2, AP3 and AP4 reported annual returns before costs of 9.1%, 8.9% and 9.2% respectively.

AP1 said it had upped its investment in growth markets while reducing its exposure to the US dollar during the year.

Johan Magnusson, AP1’s chief executive said: “The main contributors in absolute money terms were equities and real estate.”

In order to meet increasingly challenging external conditions, he said the fund was striving continuously to refine and develop its portfolio.

“Measures in 2017 have included extending our investments in growth markets and reducing our exposure to the US dollar in favour of the Swedish krona,” Magnusson said.

AP1 was also continuing its “determined sustainability work with a clearly integrated approach, whereby we regard sustainability to be one of several natural and vital aspects when assessing investments,” he said.

In April last year the fund invested $250m (€203m) in a low-volatility “resource-efficient” equities fund, run by UK-based Osmosis Investment Management.

AP1’s total assets grew to SEK333bn (€32.8bn) at the end of December, from SEK311bn at the end of 2016.

The buffer fund paid SEK7.4bn into the pension system during 2017, compared to the SEK6.6bn payment in 2016.