Sweden’s AP3 this morning reported the fund made a 20.7% return after costs in 2021, or SEK86.8bn (€8.1bn), beating its Gothenburg-based peer AP2, which posted a 16.3% return 10 days ago.

In its annual report, AP3 said that within its overall investment portfolio, listed equities and alternatives had generated returns of 23.8% and 30.7%, respectively, and a weakening of the Swedish krona had boosted the return by two percentage points.

AP3 is the first of the three Stockholm-based Swedish national pensions buffer funds to report 2021 results this week, with AP1 and AP4 due to publish their annual reports on Wednesday.

Kerstin Hessius, AP3’s chief executive officer, said: “This is the fund’s best result both in percent and billions of kronor since the fund was started December 2001.”

The latest data show a shift in the fund’s asset allocation towards alternatives and away from fixed income investments during the year, with alternatives ending the year with a 28.8% slice of the portfolio, up from 24.9% a year ago.

AP3’s fixed income weighting fell to 27.4% at the end of 2021, from 31.0% at the end of 2020, while listed equities – the other of AP3’s main asset types – saw less change in allocation terms, dipping to 44.9% from 45.6% between the years.

The fund’s total capital grew to SEK502bn at the end of 2021, from SEK423bn a year before, having made SEK7.5bn of net payments into the income pension system – the main part of Sweden’s overall state pension.

Private equity investor AP6 reports 49% return

Meanwhile, AP6 – the smallest buffer fund backing the Swedish income pension system, which invests only in private equity – declared a 49.1% return for 2021, which it said was its highest ever annual gain.

In absolute terms, the annual return was SEK22bn, according to the annual report out today. In 2020, AP6 made a 20.4% return.

Katarina Staaf, managing director of AP6, said: “We can see the full impact of our carefully designed, long-term strategy and how the portfolio benefits from a very strong market with high liquidity.”

For a single fund commitment, the investment commitment was seven to 10 years, AP6 said, and for a single co-investment, the holding period was three to five years.

In its report, AP6 said its transaction rate had been very high in 2021, with more than a dozen fund commitments being made within the buyout implementation and about 20 co-investments. Within venture, growth and secondary, it said about 10 commitments had been made during the year.

Around half of 2021 fund commitments consisted of new partners, AP6 said, which it said meant the portfolio was broadening out more, adding that there had also been a broadening of the partner base within co-investments.

AP6’s capital sum ended 2021 at SEK67.3bn, having risen from 45.2bn at the end of 2020, according to the report.

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