“AP4 posted a return of 3.8 % for the first half of the year. Given the prevailing market situation, this can be regarded as a satisfactory result,” comments Niklas Ekvall, CEO of AP4.
“It is gratifying that our active management continues to deliver an excess return in relation to the reference index that guides our long-term asset allocation. This excess return was 1.4 percentage points during the first half of 2018 and thereby accounts for a considerable share of AP4’s total return. Essentially all parts of our asset management have made a positive contribution to the active return, with Swedish equities as the dominant area.”
AP4’s total costs amounted to 0.10 of average fund capital. Operating expenses amounted to 0.06 and commission expenses amounted to 0.04 %. The cost level was 65 % lower than for a selection of international pension funds in an independent survey conducted by CEM Benchmarking, and is thus low in an international comparison.
The work begun in 2018 on adopting a comprehensive approach to sustainability is now taking shape in various parts of the portfolio. At the start of the year AP4 made an investment in the Amundi Planet fund, which aims to develop and invest in the market for green bonds in emerging markets and developing countries. AP4 has also taken further steps to reduce the carbon footprint of its portfolio by divesting shares in companies in which coal accounts for more than 20% of sales. This has further reduced AP4’s carbon footprint and thereby lowered climate risk in the portfolio.
“The work on deepening and broadening our sustainability work is continuing with undiminished strength, and we are working intensively with several projects involving both sustainability analyses and sustainability investments,” comments Niklas Ekvall.
In June 2018 the Swedish government submitted a proposal to parliament on changed rules for AP1–AP4. The intention is that the changes will be made in two steps, with the first step taking effect on 1 January 2019, and the second step planned to take effect on 1 July 2019.
“I have a very positive view of the modernisation of the investment rules. This modernisation is necessary to give the AP Funds the conditions for modern and cost-effective asset management,” concludes Niklas Ekvall.
|Key ratios for AP4's operations||June 30, 2018||June 30, 2017||December 31, 2017|
|Fund capital at end of period, SEK bn||366.9||347.6||356.6|
|Net result for the period, SEK bn||13.7||17.3||30.1|
|Net disbursements to pension system, SEK bn||-3.3||-3.7||-7.4|
|Fund capital at beginning of period, SEK bn||356.6||333.9||333.9|
|Asset management costs, operating expenses, %||0.06||0.06||0.06|
|Asset management costs, commission expenses, %||0.04||0.04||0.04|
|Total asset management costs, %||0.10||0.10||0.10|
|Return on total portfolio, net of asset management costs, %||3.8||5.2||9.1|
|Real return on total portfolio, net of asset management costs, %1||2.9||4.5||7.4|
|Annualized total return after asset management costs, average 5 years, %||11.0||11.8||11.5|
|Annualized total return after asset management costs, average 10 years, %||8.7||6.5||7.3|
|Real annualized return after asset management costs, 10 years, %1||7.9||5.4||6.9|
AP4's mission is to contribute to financial security for retirees of today and of tomorrow by managing part of the buffer capital of Sweden’s national pension system. AP4’s long-term perspective, responsibility as shareholder and strong commitment to sustainability creates the conditions for high returns at a low cost. In this way we contribute to more secure pensions.
AP4’s Interim Report can be read and downloaded at www.ap4.se.
For further information, please contact:
Niklas Ekvall, CEO, phone: +46(0)8 787 75 51
Tobias Fransson, Head of Strategy & Sustainability, phone: +46 (0)8 787 75 28