Sweden’s AP4 has now recouped nearly half of the SEK62.5bn (€5.4bn) it lost amid plunging financial markets last year, according to its interim results posted yesterday.
The buffer fund – one of five backing Sweden’s income pension, the main part of the state pension – reported it made a return of 6.0% after costs between January and June, gaining SEK27.7bn and bringing its total assets to SEK486.6bn.
AP4, narrowly the second-largest of the main four buffer funds, in 2022 posted the widest investment loss of the four, losing 11.9% and giving up its number one position to AP3.
Niklas Ekvall, chief executive officer of AP4, said: “The strong performance of the stock markets at the start of the year has been favourable for AP4’s portfolio, which showed a return of 6.0% after costs for the first half of 2023.”
However, the financial markets continued to be characterised by great uncertainty, he said.
“Having said this, during the first six months of the year we saw generally positive performance in the world’s stock markets, with a broad, global equity index rising by 14%. This result represents a slight recovery from the weak 2022,” he said.
Ekvall said the Stockholm-based fund had a very long-term mission, and what mattered was the return its investment portfolio generated over long-term horizons.
Over the last five and 10 years, and since the new pension system started in 2001, AP4 had returned 7.4%, 9.2% and 6.2%, respectively, he said.
On sustainable investments, the CEO said the fund was continuously analysing trends and looking for investment opportunities – for example, in fossil-free transport, green buildings, infrastructure and fossil phase-out in energy systems.
“Over the past three years, AP4 has invested close to SEK30bn in such thematic sustainability investments and our ambition is to gradually increase the allocation to this type of investment at the rate at which we can identify those with good potential,” he said.
Between January and June, AP4 paid SEK2.6bn into the income pension system, according to the results statement.