Sweden’s seventh AP fund (AP7) has said it produced a 32% return for savers in its balanced Såfa pension fund, which it said beat the average return of 16% of competitor funds in the premium pension system.

Richard Gröttheim, deputy director at AP7, said: “The fact Såfa did so well is down to the large equity exposure.”

Leverage also provided an extra boost that was hard to beat in the good times, he said.

Fees have been cut for the second year in a row, he said, falling to 0.12% as of 1 January, from 0.14% in the equity fund and to 0.05% from 0.08% for the fixed income fund, he said.

AP7 operates as a state-owned alternative to the private investment funds in Sweden’s first-pillar premium pension system.

Its Såfa fund has 3m customers, and is composed of AP7’s “building-block” equity and fixed income funds, with the proportions depending on customer age profiles.

AP7’s net profit dipped slightly to SEK63.26m in 2013 from SEK64m.

Its equity fund generated an investment return of 34% in 2013, up from 18.5% in 2012.

In absolute terms, the fund ended the year with a profit of SEK41.99m, up from the previous year’s SEK18.01m.

Total assets rose to SEK173.5bn from SEK123.3bn.

The bond portfolio, meanwhile, produced a total return of 1.8% in 2013, which AP7 described as a positive result given that market yields had fallen over the year.

Last year, the bond fund returned 2.8%.

In absolute terms, the bond fund made a profit of SEK160,195, compared with SEK187,155 the year before.

Total assets in the bond fund rose to SEK12.69bn from SEK8.87bn.

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