Sweden’s AP2 has ramped up its private equity allocation to 15% after absorbing fellow national pensions buffer fund AP6 at the start of this year, and expects to get SEK28bn (€2.6bn) of cash to spend on new investments in the next two years as the rest of the now-defunct fund’s private equity assets mature.
However, in its annual report released on Wednesday morning, the Gothenburg-based fund posted a return of just 4.6% for 2025 after admitting that currency effects knocked 3.5 percentage points off its investment gains.
Under the AP funds reform, which took effect at the beginning of this year and was primarily aimed at reducing costs in the buffer fund system, the three Stockholm-based buffer funds were also merged into two with AP1’s assets shared out between AP3 and AP4.
Eva Halvarsson, AP2’s chief executive - and soon due to retire - said: “AP2 delivers a result of SEK20.9bn after a year in which we have navigated an uncertain world while simultaneously managing internal transformation.”
Commenting on the implementation of merger with AP6, AP2 said: “Given that AP2’s mandate remains unchanged, as a diversified buffer fund, the fund’s return and risk must be balanced according to the needs of the pension system.
“The strategic allocation to private equity in the portfolio has been increased from 10 to 15%,” it said, adding: “This is high by international standards and is the level expected to generate the best risk‑adjusted return.”
To manage and oversee the increased capital, the fund said it would take on around 10 new employees in 2026 across asset management, business support, risk, legal and sustainability.
AP2, which was criticised by AP6’s CEO last year for refusing to take over more of the specialist private equity fund’s operation in the merger, said: “AP2 has over two decades of experience in successful private equity investments, supported by a Swedish and international network, a globally diversified portfolio and a strategy that has delivered high returns.”
The surviving fund, whose assets totalled SEK475bn at the end of 2025 not including AP6’s portfolio, said the assets from AP6 had been divided into a transport portfolio and a transition portfolio.
“About one‑third of AP6’s assets belong to the transport portfolio and will be transferred to AP2’s private equity portfolio during 2026,” it said.
“The remaining assets will be managed separately in a transition portfolio until their respective liquidation dates, when the proceeds are transferred to AP2’s portfolio,” AP2 said, adding that this was the most cost‑effective way to implement the change.
“As AP6’s portfolio is mature in profile, around half of the transition portfolio is expected to reach liquidity within two years,” it said.
Given that AP6’s total assets at the end of 2025 were SEK83.5bn, this suggests these maturing private equity investments could yield some SEK28bn of cash for AP2 to invest in other assets in the next two years.
AP2 said it estimated the savings from merging it with AP6 would amount to between SEK80m and SEK100m a year from 2027.
In the AP6 2025 report, published by AP2 today, AP6’s internal costs for last year - which include SEK109m of staff costs - rose to SEK153m from SEK105m the year before.
