AP4’s exposure to Swedish equities helped the SEK366.9bn (€35.6bn) fund to outperform its benchmark in the first half of 2018.
As the first of Sweden’s four main state pension buffer funds to report first-half figures, AP4 posted a 3.8% investment return, beating its benchmark by 1.4 percentage points.
Niklas Ekvall, chief executive of the Stockholm-based fund, said: “It is gratifying that our active management continues to deliver an excess return in relation to the reference index that guides our long-term asset allocation.”
The fund’s net result for January to June was SEK13.7bn, according to the interim report, and total fund capital grew to SEK366.9bn from SEK356.6bn at the end of December 2017.
AP4 paid SEK3.3bn to the pension system in the period.
Ekvall said the fund’s work on sustainability had been “deepening and broadening” over the first six months of 2018.
“We are working intensively with several projects involving both sustainability analyses and sustainability investments,” he said.
Work on adopting a comprehensive approach to sustainability was now taking shape in various parts of the portfolio, the pension fund said.
At the beginning of this year, AP4 invested in the Amundi Planet fund, a $1.4bn (€1.2bn) green bond fund, alongside several other major Swedish and European institutional investors.
It also divested from firms in which coal accounted for more than 20% of sales.
“This has further reduced AP4’s carbon footprint and thereby lowered climate risk in the portfolio,” the fund stated.
Draft legislation on a set of new investment guidelines for the AP funds is expected to be passed by parliament after September’s elections. The bill includes a new focus on the funds’ work on sustainability.
Ekvall also said he had “a very positive view” of the revamped investment rules.
“This modernisation is necessary to give the AP Funds the conditions for modern and cost-effective asset management,” he said.