Second AP Fund maintains strong results – 13.3 percent return on investment in 2014
The Second AP Fund reported a total return on investment of 13.3 percent for the full twelve months, excluding expenses. Fund capital rose by SEK 29.2 billion, totalling SEK 293.9 billion. The net result was SEK 34.3 billion. The relative return on the total portfolio, excluding alternative investments and costs, amounted to 0.5 percent. The Fund’s performance in 2014 means that it has exceeded targeted return in both the long and short term.
“After fourteen years operations, today’s Fund is a mature, efficient organization with a clearly defined strategy, well equipped to meet still greater future turbulence, which developments this year amply demonstrate. We have a broad and well diversified portfolio and all asset classes have contributed to the year’s strong results. Our active portfolio management has generated an excess return of 0.5 percent, contributing SEK 1.1 billion to the national pension system. It is also highly positive that we have been granted a permit for further investment in listed Chinese equities, given the fact that this portfolio generated a return of no less than 59.1 percent in 2014,” states Eva Halvarsson, CEO of the Second AP Fund.
In the past five years, the Fund’s average annual real return has totalled 8.7 percent and, over the past ten years, 6.1 percent. For the sixth year in succession, net outflows to the pension system were negative, which means that the Fund once again paid out more to the pension system to cover the shortfall than it received in the form of pension contributions. As of year-end 2014, the Fund had contributed SEK 25 billion to cover the shortfall in the pension system.
- The Second AP Fund’s assets under management totalled SEK 293.9 (264.7) billion on December 31, 2014, against which net outflows to the national pension system were charged in an amount of SEK – 5.1 (– 6.9) billion.
- The Fund posted a net result for the year of SEK 34.3 (30.1) billion.
- The Fund’s return on the total portfolio was 13.3 (12.8) percent, excluding commission costs and operating expenses. Including these costs, the portfolio generated a return of 13.1 (12.7) percent.
- The relative return on the total portfolio, excluding alternative investments and costs, amounted to 0.5 (0.4) percent. Over the past five years, the average real return was 8.7 percent.
- Over the past decade, the Fund has generated a return of 102.5 percent, corresponding to an average annual return of 7.3 percent. After a deduction for inflation, this corresponds to an annual real return of 6.1 percent.
- Operating expenses, expressed as a percentage of portfolio management costs, remained low and amounted to 0.07 (0.07) percent.
- For the second time, the Second AP Fund has chosen to analyse and calculate the carbon footprint for its portfolio of equities. Fund investments in equities represent 2 204 000 tCO2e, corresponding to 17 tCO2e per invested SEK million kronor.
- In January 2015, the Second AP Fund’s capital assets exceeded SEK 300 billion.
- In January 2015, the Fund received permission to invest a further USD 200 million in equities listed on China’s domestic markets. The Fund had already received its first permit in 2013, for a corresponding amount.
The English version of the AP2 Annual Report 2014 will be available at www.ap2.se from mid of March.
For further details, please contact CEO Eva Halvarsson, Second Swedish National Pension Fund, +46 31 704 29 00, or Ulrika Danielson, head of Corporate Communications, on +46 31 704 29 29.