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Impact Investing

IPE special report May 2018

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Swedish default fund AP7 returns 8.3% over first half

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  • Swedish default fund AP7 returns 8.3% over first half

SWEDEN - AP7, the government default option within the Swedish premium pension system, returned 8.3% for the first six months of the year.

By comparison, Sweden's private fund management firms returned 4.6% on average over the same period.

The AP7 equity portfolio returned 8.9% during the first half, while the bond portfolio returned 1.1%.

AP7 again beat its private competitors in the premium pension system, which returned between 5-6% on average over the period.

Since it was launched in 2000, AP7 has returned 9.6% compared with 0.04% for the private funds in the system. 

The buffer fund currently has more than SEK113bn (€13.3bn) in assets under management.

Last week, AP1 saw returns increase to 4.5% over the period, having reduced its equity exposure by a further 10% and increased investments in alternative assets in the six months to June.

According to its half-yearly report, the fund successfully allocated almost all of the SEK10bn earmarked for alternatives, with hedge funds taking the largest share of the assets.

Managing director Johan Magnusson said earlier this year the fund would seek to de-risk its equity portfolio after suffering losses of nearly 10% over the course of 2011.

Since the end of the year, equity exposure has decreased from nearly 50% of the scheme's total of SEK221bn in assets to 45%, previously accounting for 60% of all investments.

AP1 produced substantially higher returns over the first six months to June than at either the end of last year or June 2011.

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