Interim report 1 January – 30 June 2014: AP3 reports income of SEK 16.6 billion and a doubling of fund capital since 2001
The Third Swedish National Pension Fund, AP3, has reported very strong income
of SEK 16.6 billion for the six months ended 30 June 2014. This result lifts fund capital to a
record SEK 272,6 billion – double the level at the Fund's inception in 2001.
Income totalled SEK 16,571 million (12,462) million, equivalent to a return of 6.5% (5.4) after expenses. Over the last five years, return for the period averages 8.2%.
Commenting on the results, AP3 CEO Kerstin Hessius said: “Our asset management strategy has worked well, resulting in high returns and low costs compared with similar pension funds at international level and a doubling of fund capital since inception in 2001.”
She added: “We have made a strong contribution to the financing of the pension system by generating returns that have grown faster than the income index. Since 2009, AP3 together with AP1, AP2 and AP4 has paid out close to SEK 90 billion to cover the deficit between contributions and disbursements in the mandatory pay-as-you-go pension system.
“Seen against that background, we find it difficult to understand that the Pensions Group has proposed such wide-ranging changes to the current system of AP funds. The system needs to be reviewed from time to time, but we are concerned that the recommendations will have a negative impact on both current and future pensions.”
AP3's half-year results in brief
- Profit for the six months ended 30 June 2014 totalled SEK 16,571 million (12,462), corresponding to a return of 6.5% (5.4) after expenses.
- AP3 has generated an average annual return of 8.2% (8.5) in the last five years and 6.4% (6.0) over 10 years.
- Annual real return – return adjusted for inflation – was 7.2% (7.3) in the last five years and
5.1% (4.7) over 10 years. Hence, the Fund has surpassed its real total return target of 4% per annum over time.
- According to an international study, AP3's costs are 41% lower than a benchmark group average and AP3's return after expenses over the last five years exceeded the combined return of the benchmark group by 21%, demonstrating the Fund's high level of cost-efficiency.
- AP3 is committed to continuing to diversify the portfolio and make it more robust. This is a gradual process that is being achieved by increased exposure to alternative investments such as real estate and infrastructure and higher exposure to risk premium strategies
- AP3 drives long-term value creation in a variety of ways. During the period the Fund integrated environmental and social governance into the asset management and investment process. AP3 made new investments in green bonds and in the Generation Climate Solutions Fund II and also launched a project to measure the carbon footprint of portfolio investments.
Background material can be found on the AP3 website or via the links below:
AP3 Corporate Stewardship Report will be published shortly
For more information please contact: