Second AP Fund reports a total return of 10.5 percent for 2016
The Second Swedish National Pension Fund (AP2) reported a total return on investment of 10.5 percent for the full twelve months, excluding expenses. Assets under management rose to SEK 324.5 billion. The net result was SEK 30.5 billion. The Fund’s performance in 2016 means that it has exceeded the long term targeted return in both the long and short term.
CEO, Eva Halvarsson, comments on the result:
“In the past year, we have been able to celebrate the fact that the fund capital achieved the highest level ever, SEK 324.5 billion, despite a record payment to the pension system which in 2016 amounted to SEK 6.6 billion.”
“Profit for the year shows that our globally diversified portfolio has generated solid results. All asset classes had a positive return in 2016, not least shares and bonds in emerging markets.”
“We think that our diversified portfolio will continue to generate a good return for Sweden’s pensioners. At the same time we realise that the return levels we have historically had become increasingly difficult to achieve, with such large part in fixed-income securities, with the applicable investment regulations for the AP funds.”
“It is gratifying to be able to state that the internalisation has provided the cost efficiency we predicted. The Fund’s total costs in relation to assets under management are now at the lowest level, except for 2007, and this is despite the fact that the portfolio has become increasingly complex with different asset classes in more and more markets.”
“During 2016 we implemented ESG factors in the global shares asset class in the quantitative management, which comprises approximately SEK 90 billion of the fund’s capital. In addition, we decided to include green bonds as part of the strategic portfolio, which represents an additional step in implementing sustainability issues in the portfolio management.”
In the past five years, the Fund’s average annual real return has totalled 10.8 percent and, over the past ten years, 4.7 percent.
- AP2’s assets under management totalled SEK 324.5 (300.6) billion on December 31, 2016, against which net outflows to the national pension system were charged in an amount of SEK – 6.6 (–4.9) billion.
- The Fund posted a net result for the year of SEK 30.5 (11.7) billion.
- The Fund’s return on the total portfolio was 10.5 (4.1) percent, excluding commission fees and operating expenses. Including these costs, the portfolio generated a return of 10.3 (4.0) percent.
- The relative return on the total portfolio, excluding alternative investments and costs, amounted to –0.4 (0.9) percent.
- Operating expenses, expressed as a percentage of asset management costs, remained low and amounted to 0.07 (0.07) percent.
|Fund Capital at 31 Dec, SEK m||324 522||300 624|
|Net result, SEK m||30 535||11 661|
|Net outflows to national pension system, SEK m||–6 637||–4 944|
|Fund Capital at 1 Jan, SEK m||300 624||293 907|
|Expense ratio, operating expenses, %||0.07||0.07|
|Expense ratio, incl. commission fees, %||0.15||0.18|
|Return after expenses, %||10.3||4.0|
|Annualized return after expenses, 5 years, %||10.6||8.0|
|Annualized return after expenses, 10 years, %||5.5||5.7|
The English version of the AP2 Annual Report 2016 will be available at www.ap2.se from beginning 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.