Sweden’s AP6 pension buffer fund, which invests solely in private equity, made a net return of 9.2% in 2013, the same as the previous year, with profits from mature companies outweighing losses on new firms.
The pension fund said it was continuing to shift its portfolio towards buyouts and away from venture capital.
The sixth AP fund differs from the other AP funds in the Swedish pensions buffer fund system in that it receives no new money from the government, nor does it make pension payments.
It invests in private equity – directly as well as through funds – focusing on companies in the Nordic region.
In absolute terms, AP6’s net profit for the year was SEK1.86bn (€210m), compared with SEK1.7bn in 2012, the fund said in its annual report.
In the last 10 years, it said the net annual return had been 5.6%.
This was the result of “very successful investments in mature companies,” on the one hand, it said, with these producing a 14% return, both directly and through funds, and losses made on early-stage companies of 11.7%.
Early-stage companies, however, now make a up a relatively small percentage of the portfolio, AP6 said, as a result of a change in overall investment strategy in recent years.
Internal costs fell to SEK98m from SEK116m.
The fund said its activity levels had been high during 2013 in both corporate and mutual fund investments.
Karl Swartling, deputy director at AP6, said: “Transition work towards a more mature company has continued both in terms of direct investments and fund investments.
“We are still at the beginning of building a new portfolio of investments that will generate long-term returns, over a 5-10 year time horizon.”
Value growth in this type of unlisted portfolio will not happen from day one, he said, but will normally be visible in performance figures some years into the ownership period.
AP6’s total assets under management grew to SEK22.1bn at the end of December 2013 from SEK20.2bn a year before.