Swedish national pension fund AP7 made an average loss of 2.8% on its balanced fund Såfa last year – but still beat the average 2.9% loss from private-sector pension providers.
In its annual report, AP7 said falling global equity markets had led to negative returns on products that had a high equities weighting.
Chief executive Richard Gröttheim said in the report: “No one knows if the year was a minor correction, the beginning of a major decline, or just a staggered journey sideways for some years.”
The year’s results compared to a positive return of 14.4% in 2017.
On a time-weighted basis, AP7 said Såfa had returned an average 5.9% a year since the fund’s inception in 2000, above the 3.1% average return from the private sector providers in Sweden’s Premium Pension System (PPM) – the defined contribution (DC) part of its state pension provision.
AP7 said responsible investment with an emphasis on environmental impact had been particularly important in its activities in 2018.
In a statement accompanying the annual report release, the pension fund said: “In 2018 we focused on whether the companies we invest in are engaged in lobbying that prevents the Paris agreement from being translated into national climate legislation.
“We will continue this important work in 2019, as companies that oppose climate laws constitute a serious problem.”
Having invested during the year in companies that contribute to the UN’s Sustainable Development Goals for fresh water and climate, AP7 said it was continuing to raise its ambitions as a sustainable and responsible investor in 2019.
Total assets managed by AP7 rose to SEK460.1bn (€43.6bn) at the end of 2018, from SEK430.7bn a year before. Within this, SEK418.9bn was in its equities fund and SEK41.2bn in the bond fund.
The increase in total assets was due, the fund said, to the inflow of contributions during the year.
AP7 runs the Såfa fund as the default option in the PPM. The system also includes a platform where Swedes can choose to invest their contributions with any of hundreds of private investment companies. This section is currently undergoing a thorough reform process .
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