Första AP-Fonden, the First Swedish National Pension Fund (AP1), has maintained strong returns on its portfolio for calendar year 2013, returning SEK25.7bn (€2.9bn), or 11.2%, after expenses, compared with 11.4% for 2012.
This gives an annualised return after expenses of 6.5% over a rolling 10-year period, compared with the target of 5.5%.
During the year, net assets under management grew by SEK18.8bn to SEK 252.5bn.
The fund’s management costs were SEK350m, equal to an expense ratio of 0.14%, the same as in 2012.
Johan Magnusson, chief executive at AP1, attributes the performance to continuing last year’s strategy of creating a portfolio that can generate high returns with low risk.
Magnusson said: “Based on experiences from the financial crisis, AP1’s strategy has been aimed at building a portfolio that is robust to major changes in value.
“In accordance with that, we have continued to diversify risks in the portfolio.”
In the past year, AP1 has increased its investments in real assets such as real estate and private equity funds, and reduced investments in listed equities and fixed income markets, he said.
And he told IPE that equities – except for emerging markets – and real estate had the best absolute performance in 2013.
During the year, AP1 also worked to further integrate sustainability factors into its investment analysis.
Magnusson said: “In our long-term analysis, it is always more apparent that risks and opportunities tied to sustainable business operations are key factors to take into account.
“Our long-term approach as owners and our concentrated portfolio, in which our managers have actively selected the companies, give us ample scope to analyse and engage ourselves in the companies where we have holdings.”
However, he told IPE it was too early to evaluate whether the emphasis on sustainable investing had contributed to the results.
But AP1’s concentrated in-house portfolios have performed in line with benchmark since inception.