AP3 interim report for the six months ended 31 June 2016

  • AP3 recorded a profit of SEK 4,206 million (18,483) for the first six months of 2016.

  • Fund capital reached SEK 304,021 million, an increase of SEK 990 million (16,066) during the period. The Fund capital at 1 January 2016 was SEK 303,031 million.

  • AP3 paid SEK 3,216 million (2,417) to the Swedish Pensions Agency during the first half of the year to cover a shortfall between incoming pension contributions and outgoing pensions.

  • Total real return was 1.5% (6.5) before expenses and 1.4% (6.4) after expenses. The Inflation, Fixed Income and Currency risk categories made the largest contributions to this performance.

  • AP3 has generated average annual returns of 8.3% and 5.7% over the last five and 10 years respectively. This compares to annual increases of 1.8% and 2.5% in the Swed­ish Income Index over these respective time frames. By outperforming the income index, which is used to keep pensions in line with inflation, AP3 has made a substantial contribution to the pension system during the periods in question.

  • Annual real return – return adjusted for inflation – was 7.9% and 4.6% for the last five and 10 years respectively. Average annual real return now stands at 4.1% since incep­tion, meaning that the Fund has surpassed its real return target of 4% per annum over time.

  • The asset management cost ratio was on an annual basis 0.12% (0.12) of which operating expenses were 0.06% (0.06).

  • From 1 January 2012 to 30 June 2016, AP3’s return was 0.3 percentage points lower than the LSP reference portfolio. AP3 has outperformed the LSP by 2.9 percentage points on a yearly basis since the reference portfolio was introduced in 2012.

  • To be able to meet increased expectations for sustainable investment and to achieve the climate goals signed in Paris 2015 by the Swedish government, AP3 has adopted sustainability targets for 2018. These include measuring and reducing carbon footprint in the portfolio and further investments in green bonds.  

Summary of AP3’s results 2016:

    Jan - June 2016 Jan – June 2015 Jan – Dec 2015
Fund capital at 30 June, 2016 304,021 304,398 303,031
Income for the year 4,206 18,483 19,643
Net flows to the pension system 3,216 2,417 4,944
Fund capital at 1 January, 2016 303,031 288,332 288,332
Asset management cost ratio – operating expenses %* 0.06 0.06 0.06
Asset management cost ratio incl. commission expenses %* 0.12 0.12 0.12
Return after expenses 1.4 6.4 6.8
Annualised return after expenses 5.0 yrs** 8.3 9.3 8.4
Annualised return after expenses 10.0 yrs** 5.7 6.0 5.7

* In the interim reports, the asset management cost ratio is shown on a full-year basis

** In the interim reports, annualised return is shown as 10.0 and 5.0 years respectively
Income statement

INCOME
SEK m Jan - Jun 2016 Jan – Jun 2015 Jan-dec 2015
Net interest income 568 725 1,559
Dividends received 4,474 3,569 4,644
Net income from listed shares and investments -4 930 8 132 4,418
Net income from unlisted shares and investments 545 3 143 6,636
Net income from fixed income assets 4,025 158 -189
Net income from derivatives -701 -649 -873
Net income from currencies 403 3,585 3,811
Net commission expenses -86 -84 -170
Total income 4,297 18,579 19,836
Operating expenses
Staff costs 61 62 115
Other administrative expenses 31 34 77
Total operating expenses 91 96 192
Profit for the period 4 206 18 483 19 643

 Balance sheet

ASSETS
SEK m 2016-06-30 2015-06-30 2015-12-31
Shares and investments
     Listed 146,985 144,378 143,642
     Unlisted 4, 436 41,805 39,196
Bonds and other fixed income assets 133,246 139,492 132,373
Derivatives 4,287 5,455 5 ,460
Cash and cash equivalents 1,072 1,386 1,780
Other assets 10,533 21,181 11,569
Prepaid expenses and accrued income 1,004 1,203 1,083
Total assets 338,563 354,899 335,101
FUND CAPITAL AND LIABILITIES
Liabilities
Derivatives 6,059 4,237 3,071
Other liabilities 28,349 46,219 28,920
Deferred income and accrued expenses 133 46 79
Total liabilities 34,542 50,501 32,070
Fund capital
Fund capital at start of period 303,031 288,332 288,332
Net payments to pension system -3,216 -2,417 -4,944
Profit for the period 4,206 18,483 19,643
Total fund capital 304,021 304,398 303,031
Total fund capital and liabilities 338,563 354,899 335,101

AP3 published its sustainability engagements in the 2015 annual report and sustainability report. Both these documents can be viewed and downloaded at www.ap3.se.

For further information, please contact:

Kerstin Hessius, CEO, Third Swedish National Pension Fund, +46 8555 17 100
Lil Larås Lindgren, Head of Communikation Third Swedish National Pension Fund, +46 8 555 17 123 eller lil.lindgren@ap3.se

The Third Swedish National Pension Fund (AP3) is one of five funds that manage the Swedish state pension system’s capital buffer. The fund had total capital of SEK 304 billion as at 30 June 2016. Established when the current pension system launched in 2001, AP3 has so far contributed SEK 20 billion to help cover deficits arising within the system. AP3’s fund capital stood at SEK 134 billion at inception and the Fund has generated an annual return of 5.4% since 2001. During this period the income index, which is used to keep pensions in line with inflation, has risen by 2.8%.   

About Us

Swedish Third National Pension Fund (AP3) is one of five buffer funds in the Swedish income pension system. The Fund has the parliamentary mandate to manage the Fund's assets to the greatest possible benefit for the pension system by creating a high return at a low risk level. AP3 has a return of 9.3 percent on average per year over the past five years. The corresponding figure for the income is 2.4 percent, which means that AP3's return has greatly contributed to the pension system. As of 30 June 2015 managed fund 304 billion.

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