AP4 reaches a new record level with 310 billion in fund capital

Together with a profit of SEK 18 billion, the Fourth Swedish National Pension Fund (AP4) increased fund capital to SEK 310 billion, a new record level. The total return was 6.1 percent after expenses. AP4 has thereby exceeded the long-term return target.

–  It is gratifying that AP4 once again surpasses the long-term return target. Over the past ten years, total return has been on average 7.4 percent per year, which corresponds to a real return of 6.2 percent per year, says Mats Andersson, CEO of AP4.

– During the first half of 2015, AP4 continued to increase investments in strategies that lower the equity portfolios carbon footprint. These investments, since the start three years ago, have helped to increase returns and reduce risk compared to a global passive management, says Mats Andersson.

– We should also value that AP4 during the first half of 2015, once again, have received international awards and recognition for the way we operate, says Mats Andersson.

  • Fund capital rose to SEK 310 (295 per 2014-12-31) billion and net profit was SEK 18 (19) billion. Over the past three years, net profit totaled more than SEK 100 billion.

  • Total return after expenses was 6.1% (7.2). Total return before expenses was 6.1% (7.3).

  • Since evaluation began on 1 July 2001, real return has amounted to an average of 5.0% annually. AP4 overshot the long-term real return target of an average of 4.5% annually.

  • AP4's active Tactical Management (investment horizon of up to three years) returned -0.2 (0.3) percentage points before expenses. After twelve consecutive half-year results with a positive return better than the index, returns for the first half of 2015 where lower than the benchmark. However, three of the five sub-portfolios outperformed the index during the period. Over the evaluation horizon of a rolling three years, the active return amounted to an average of 0.4 percentage points per year on, which corresponds to a profit contribution of SEK 2.3 billion.

  • AP4's management costs are low and very competitive in both domestic and international comparisons. The management cost ratio, excluding commission costs, amounted to an annualized 0.07 (0.07) percent of assets under management. Including commission costs, expenses amounted to 0.11 (0.11) percent. Management costs amounted to SEK 165 (147) million.

  • Foreign exchange exposure was 27.8 % (28.1 per 2014-12-31) at the end of the period.

  • More than net SEK 2.4 billion paid into the pension system from the Fund capital to cover the deficit between pension payments and receipts. AP4 has in total, since 2009 when the system's net flows turned negative, paid out more than SEK 27 billion from the Fund capital to the pension system. Despite the payments, AP4’s Fund capital has increased.

 

Stockholm, 10 July 2015

 

AP4's interim report for 2015 can be read and downloaded here.

 

For more information, please contact Mats Andersson, CEO AP4.

Published Friday, July 10, 2015