AP4's operations are regulated by The National Pension Insurance Funds (the AP Funds) Act (Lag (2000:192) om allmänna pensionsfonder (AP-fonder)). The law states that AP4's overall mission is to "manage fund capital in a way that maximises the benefit of the insurance for income-based retirement pension", in other words, in the long term to create the highest possible return for the benefit of those insured in the Swedish pension system.
The AP Funds Act's preliminary draft (Bill 1999/2000: 46) states that "Industrial policy or other economic policy assignments shall not exist. Environmental and ethical considerations must be taken into account in the investment operations without compromising the overall goal of high returns."
The term "environmental and ethical considerations" is used in the preliminary draft of the AP Funds Act. Today, the term "sustainability" is commonly used by investors and companies. Sustainability includes a number of aspects that responsible investors use in their practice. These aspects are Environmental, Social and Governance (ESG). Responsible owners exercise corporate governance through their ownership work, which involves dialogues, AGMs, and nomination committee work. Working with corporate governance includes working with sustainability. Sustainability, with a particular focus on Climate & Environment and Corporate Governance, are prioritised areas for AP4.
The investment rules that AP1, AP2, AP3 and AP4 are to adhere to by law entail the following, in short:
- Investments may be made in all market-listed and tradable instruments on the capital market.
- A mimimum of 30% of assets must be invested in fixed income securities with low credit and liquidity risk.
- A maximum of 40% of assets may be exposed to currency risk.
- A maximum of 10% of assets may be exposed to an individual issuer or group of issuers with internal ties.
- The market value of AP4’s shares in listed Swedish companies may amount to a maximum of 2% of the respective companies’ total market capitalisation.
- AP4 may own a maximum of 10% of the votes of a single listed company.
- A maximum of 5% of assets may be invested in unlisted securities, and these investments must be made indirectly via private equity companies or similar. The exception to this limitation is holdings in property companies.
- A minimum of 10% of assets shall be managed by external asset managers.