The Normal portfolio is a reference portfolio that consists of indices and has a 40-year time horizon. AP4’s Board of Directors decides the composition of the Normal portfolio, where all decisions contributed positively to the total portfolio in 2016. Since the new management structure was implemented in 2013, the Normal portfolio has made an overall profit contribution of SEK 104.9 billion, of which equities accounted for SEK 75.1 billion.
High proportion of listed shares
The decision to hold a high proportion of listed shares long-term delivered the largest positive contribution; at year-end equities amounted to 66.3 (64.2) percent of the Normal portfolio.
The equity portion consists of 89.2 (90.2) percent in developed markets and almost 10.8 (9.8) percent in emerging markets.
The decision regarding the share of equities contributed SEK 17.2 (2.4) billion, which represented a return of 7.8 (1.1) percent.
At year-end the Normal portfolio’s share of government bonds amounted to 33.7 (35.8) percent. The decision regarding the share of government bonds provided a positive contribution of SEK 3.2 (0.1) billion.
Open currency exposure
The long-term decision not to hedge all assets denominated in currencies other than the Swedish krona contributed positively. At year end the open currency exposure was 30.9 (28.9) percent and provided a positive contribution of SEK 6.7 (3.6) billion, corresponding to a return of 2.3 (1.2) percent.