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 %), 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 2018 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.

Reduced share of external management

At the end of the first half of 2019, 86% of assets were managed internally and 14% were managed externally, compared with 16% under external management at the start of the year. AP4 manages assets internally when an aggregate assessment shows that internal management can achieve equal or better returns after costs. The legal requirement that a minimum of 10% of the portfolio must be managed externally was eliminated in connection with the changed rules for the AP Funds, which took effect on 1 January 2019.

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.