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Equities, SME investments drive 11% return at AP4

SWEDEN – Sweden’s AP4 has highlighted active management of its portfolio as key to its return of 11% in 2012, noting the approach allowed it to outperform its benchmark by 1 percentage point.

The fund’s chief executive Mats Andersson said he was “delighted” the active approach had resulted in the fourth consecutive benchmark outperformance for the fund.

“On the whole,” he said, “AP4 has contributed just over SEK5.5bn (€650m) in active earnings since the management was reorganised four years ago.”

The fund’s annual return stood at 11.2% for 2012, an improvement on the 0.7% loss suffered in 2011 and on par with the remaining three main AP funds.

AP1 saw 11.4% returns last year, similar to results at AP3, while AP2 outperformed the other three, posting 13.5% returns. Overall, the four main buffer funds reported assets under management of SEK937.7bn at the end of December.

AP2 – at SEK241bn, now the largest of the four main buffer funds – also saw the highest average results over the past decade, returning 7.6%.

However, Andersson noted that AP4’s 10-year inflation-adjusted return of 5.8% was still above the fund’s internal target of 4.5% annually.

The fund said returns were aided by its exposure to equity.

On the SEK120bn equity holdings – 30% invested in Sweden and the remainder globally – the fund saw double-digit returns, in both cases above last year’s performance.

Swedish equity returned 16.9%, only slightly behind the 17.4% results from the global equity portfolio.

The recovery from a 6.1% loss in global equity last year was outdone by the fund’s small and medium-sized enterprise (SME) portfolio, which returned 13.4% compared with a loss of more than 20% in 2011.

AP4 also said it had amended its investment approach to take advantage of its “unique” mandate as a buffer fund, allowing part of its portfolio to be invested with a time horizon of 3-15 years.

The fund’s annual report said the approach would allow “further diversification” with a clearer approach to risk – with the expanded time horizon covering investment in SMEs, real estate and domestic equity.

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  • QN-2546

    Asset class: Real Estate Equity Fund (non listed).
    Asset region: Europe.
    Size: Total CHF 600m, approx. CHF 100-300m per fund investment.
    Closing date: 2019-06-28.

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