SWEDEN - Andra AP Fonden (AP2) has reported an increase in its capital assets of SEK 10.7bn (€1.1bn) to SEK 227.5bn (€24.1bn) following a strong performance from investments in emerging and Asian equity markets.
Figures from the second Swedish national pension fund for 2007 revealed net inflows of SEK 2bn and a 4% net return on its total investment portfolio, which led to a net result of SEK 8.7bn.
AP2 also revealed it achieved a return of 13.4% on alternative investments, while it claimed the growth in the fund's capital was primarily because of the strong performance of global equities, where investments in emerging and Asian markets, excluding Japan, have posted high returns.
It also suggested a limited 11% exposure to foreign exchange and US dollars, in particular, helped to limit the impact of a weak dollar on absolute returns, although it admitted the relative return on quoted assets, before commission and operating expenses, was a negative return of -0.4%, blamed on the rebalancing effects of high market volatility.
Despite this, AP2 claimed the fund has maintained an average return of 6% per year, including the 2007 figures, which is consistent with the average targeted return deemed necessary for the fund to fulfil its responsibilities within the Swedish national pension system.
Eva Halvarsson, chief executive of AP2, said: "The past year is likely to go down in history as one of exceptional turbulence on financial markets. Even so, the Second AP Fund is able to report a favourable return for the fifth year in succession."
The full version of the 2007 annual report will be published on the AP2 website in English in early March.
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