Management costs

Focus on costs is important for achieving the goal for maximum sustainable returns over time. High quality at a low cost — or cost efficiency — is therefore a guiding principle for AP4.

Total management cost 0.10%

AP4’s total management cost was 0.10 % (0.10 %) in 2018, measured as a percentage of average fund capital. The management cost consists of operating expenses and commission expenses. Operating expenses consist mainly of personnel costs, IT costs and cost of premises. Commission expenses consist mainly of fees paid to external asset managers and custodian fees.


AP4’s operating expense ratio, which expresses operating expenses as a percentage of average fund capital, was 0.06% (0.06%). AP4’s commission expense ratio was 0.04% (0.04%).

AP4 is cost-efficient in an international comparison

AP4’s cost level was 49% lower than a selection of comparable international pension funds, according to an independent survey conducted by CEM Benchmarking. The comparison was performed
after adjusting for allocations to various asset classes and
management strategies. Excluding such an adjustment, AP4’s cost level was just under 40% of the comparison group’s costs. The lower cost level is mainly due to the fact that AP4 has chosen to manage a large share of assets internally, but also to the allocation between active and passive management and to the fact that internal management costs per managed krona are lower compared with comparative international pension funds.

Significant share of internal asset management

AP4 strives to manage assets internally when it is deemed to be cost-efficient, i.e., if AP4 can generate equal or higher returns for the same or lower cost than corresponding external management. This is based on the assumption that the right resources, expertise and experience exist internally at AP4. A larger share of internal asset management therefore entails slightly higher operating expenses.

These consist of IT system and index costs and personnel costs, among other things. This higher level of operating expenses is compensated by lower commission expenses for external asset management.

External asset management and commission expenses

For external mandates, AP4 negotiates with the aim to pay the lowest fees possible for the selected asset management strategy for an estimated maximum risk-adjusted return. Costs are steered by the choice of asset classes and asset management strategy. The goal is to achieve a high risk-adjusted return after costs. The lowest absolute cost is therefore not always an accurate measure.

At the start of 2019 changed rules took effect, of which one entails that the previous requirement that a minimum of 10% of the portfolio be outsourced to external asset managers was eliminated. Over time this is expected to be significant for AP4’s allocation of capital to external asset managers.

Cost-efficient direct investments in unlisted securities

A significant share of AP4’s exposure to holdings in unlisted property companies consists of its direct ownership in the companies Vasakronan and Rikshem. This is a long-term and cost-efficient investment form.