AP7 saw returns for 2015 decline to 6.3%, a level the Swedish fund deemed acceptable, following two years of record results around 30%.

The SEK 269bn (€28.7bn) fund, the default option for Sweden’s premium pension (PPM), said the return for members in its Såfa fund was more in line with the kind of growth that could be reasonably expected by members.

The single-digit return comes after two consecutive years of strong growth – 34% in 2013 and 31.1% in 2014 – for AP7, and coincided with the fund’s decision to cut gearing from 150% to 125%.

In a statement, the fund also said the charges associated with its equity and fixed income funds dropped to 0.11% and 0.04% – down by 1 basis point, respectively.

Since inception, privately managed funds within the PPM have seen asset growth of 50.2%, compared with the 115.3% growth recorded by AP7.

However, private funds, on average, outperformed AP7 in 2015, achieving a return of 6.7%.

In other news, buffer fund AP6 saw returns nearly double to 12.2% over the course of the last year.

AP6, which invests its SEK26.4bn portfolio purely in private equity, said the return was an increase on the 6.5% result seen in 2014.

It cited its long-term cooperation with the underlying investment companies as the reason for the result.

Since inception in 1996, the fund has achieved a 5% annualised return, growing assets by SEK16bn.

For more on AP7’s investment strategy, see IPE’s recent interview with CIO Richard Gröttheim