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AP6 and AP7 report positive returns

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  • AP6 and AP7 report positive returns

SWEDEN - Sjätte AP-fonden, the Sixth Swedish National Fund (AP6), achieved a total net profit of 13.1% in 2007, which increased the fund capital to SEK 19.6bn (€2.1bn).

The Swedish buffer fund, which invests mainly in private equity, attained an overall return of SEK 2.43bn, as gross profit reached 15.2% while net profit was 13.1%, slightly lower than the 13.8% in 2006.

Figures from the fund's 2007 annual report show fund capital increased by SEK2.4bn during the year, to bring it to SEK 19.6bn, of which 86% is invested in small and medium-sized companies in different sectors and regions.

In addition, the figures claimed over the last five years investment activities have resulted in an annual profit of 13.9%, 3.7% higher than the fund's established objective.

AP6 said activity was high during 2007 within all of its business areas and, in accordance with its strategy, it has taken on more commitments including investment in three new venture capital funds and four new buyout funds.

The fund also confirmed its section AP Life Science, which focuses on the fund SLS Venture, is continuing to look at the possibility of making more direct investments, while AP Partner Investment, which focuses on the venture capital market, has completed its expansion phase and has invested SEK1.5bn in 22 companies.

Erling Gustafsson, managing director of AP6, admitted the increased uncertainty in the financial the markets at the end of 2007 and the start of 2008 means it could become more difficult to make visible valuations from the portfolio.

At the same time, he claimed there are increased possibilities to acquire new companies, and argued AP6 is "ready to meet poorer market conditions" as a result of its developed capital structure, extensive network, and balanced portfolio.

Sjunde AP-Fonden, the Seventh Swedish National Pension Fund (AP7), meanwhile reported it generated a profit of 4.7% during 2007 for the Premium Savings Fund (Premiesparfonden), the default fund for the compulsory pension provided by the Premium Pension Authority (PPM).

AP7 admitted returns on the low fee, global share fund did not reach the same level as the average PPM fund, although it pointed out since 2000 it has achieved higher returns than the PPM average.

That said, the fund also reported the Premium Choice Fund (Premievalsfonden) - one of the 800 funds available to choose in the premium pension system - returned 7.7% in 2007, which was 1.9 percentage points higher than the average fund.

In addition, figures from the 2007 annual report revealed over a five-year period the Premium Choice Fund returned an average annual profit of 15% compared with 14.9% from the average PPM fund, despite having the same low annual fee of 0.15% as the Premium Savings Fund.

The annual report revealed outflows from the Premium Savings Fund amounted to SEK4.5bn, up from SEK 2.8bn in 2006, although overall the fund is valued at approximately SEK87.4bn which, at 28.4% of the total pension capital available, makes it the largest fund in the premium pension system.

The Premium Choice Fund also reported outflows of SEK 72m during 2007, although new contributions mean the fund has a value of SEK2.6bn, which makes it the 16th biggest fund of the 800 active funds available to savers in the premium pension system.

In total, AP7 revealed it is valued at approximately SEK90bn, up from SEK81.1bn in 2006, of which 97.1% is invested in the Premium Savings Fund, and 2.9% in the Premium Choice Fund.

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

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