Interim report 1 January – 30 June 2013
Income for the six months ended 30 June totalled SEK 12,462 millionequating to a return of 5.4% after expenses.
- The first six months of 2013 saw an initial surge in equity prices in many markets. However, volatility subsequently increased, bond yields rose and equity markets went into retreat.
- Income for the six months ended 30 June totalled SEK 12,462 million (9,848), equating to a return of 5.4% (4.6) after expenses.
- Fund capital stood at SEK 242,288 million at 30 June, an increase of SEK 9,332 million during the six months, and was negatively affected by payments of SEK 3,130 million to the pension system to balance a deficit in pension contributions.
- Over the last decade AP3 has generated an average annual return of 6.0%, representing a real (inflation-adjusted) return of 4.7%. For the last five years, the real return stands at 7.3%. The Fund has thus more than met its target of a 4% average real return over time.
- AP3 has made a positive contribution to the pension system since inception, with nominal returns outstripping the income index for the entire period.
- In 2013 AP3 continued to diversify the portfolio with the aim of achieving more stable returns and reducing exposure to volatility in global equity markets.
- AP3 increased its equity stake in property company Hemsö Fastigheter from 50% to 85% and continued the diversification of its real estate holdings by acquiring a portfolio of 72 commercial properties for just under SEK 1 billion via a wholly owned subsidiary. The properties are widely spread across Sweden, with a focus on southern and central regions.
- AP3 invested US$50 million in a credit fund specialising in enterprises that take on sustainability-related challenges, including the transition to a low-carbon economy. After the end of the period AP3 made a further investment in green bonds issued by the World Bank. This lifted our total holdings of sustainable fixed income assets to SEK 2,650 million.
"AP3 continued to diversify the portfolio by making further investments in real estate. Our real estate portfolio now accounts for more than 11 percent of our total assets, and around 20 percent of the portfolio is now comprised of alternative investments," said AP3 CEO Kerstin Hessius.
"During the first six months of the year we generated a return of SEK 12,462 million, which amounts to 5.4% after expenses. I'm delighted to say that we have surpassed our long-term return targets over the last five and ten years, which means we have made a positive contribution to the pension system."
Hessius added: "We have succeeded in our strategy of keeping asset management costs low. The annual cost-effectiveness benchmarking survey carried out by Canadian consultants Cost Effectiveness Measurement (CEM) shows our costs to be 22 percent lower than the reference group of 17 global pension funds that participate in the study. This is because we have successfully squeezed costs when procuring external management mandates and because we have a higher ratio of internally managed assets."
AP3 has published its annual stewardship governance report in Swedish today. The report presents the Fund’s corporate government strategy for the Swedish and global portfolios and the main focus issues at corporate AGMs during the last 12 months. An English version will be published in September.
AP3’s interim report 2013 can be downloaded from www.ap3.se.
For more information please contact:
Christina Kusoffsky Hillesöy
Head of Communications and Sustainable Investing
Telephone: +46 8 555 17 123
Telephone: +46 8 555 17 100
AP3 is one out of five buffer funds within the Swedish National Pension System. The Fund has SEK 242.3 bn assets under management. Read more about AP3 on www.ap3.se.