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Second AP Fund reports a total return of 4.1 percent for 2015

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The Second Swedish National Pension Fund (AP2) reported a total return on investment of 4.1 percent for the full twelve months, excluding expenses. Assets under management rose to SEK 300.6 billion. The net result was SEK 11.7 billion. The relative return on the total portfolio, excluding alternative investments and costs, amounted to 0.9 percent. The Fund’s performance in 2015 means that it has exceeded targeted return in both the long and short term.

CEO, Eva Halvarsson, comments on the result:

“Early 2015 saw the AP2’s total assets under management pass the SEK 300 billion mark for the first time. This should be compared with the SEK 134 billion the Fund started with in 2001. Furthermore, AP2’s total result has amounted to SEK 175.3 billion since the Fund’s inception.

“Especially in light of the overall market development during the year, it is gratifying to note that our active management of assets generated a relative return of 0.9 percent. Our portfolio of Swedish equities enjoyed an excellent year, producing an excess return of SEK 1.6 billion.”

“The internalization process initiated in 2012 was completed as planned in 2015. This internalization process means that, over some three years, assets of more than SEK 50 billion have reverted from external to internal management. The in-house management of this capital will mean a significant cost saving, while also enabling us to better utilize and develop the high levels of competence within the Fund.”

“In 2015, we advanced a step further in ESG field, by formalizing an overall strategy. Our vision is to make ESG an integral part of all analytical and investment processes. In implementing this strategy, based on a financial risk perspective, we will focus on four target areas – climate, diversity, reporting and governance.”

In the past five years, the Fund’s average annual real return has totalled 7.8 percent and, over the past ten years, 4.8 percent.

  • AP2’s assets under management totalled SEK 300.6 (293.9.7) billion on December 31, 2015, against which net outflows to the national pension system were charged in an amount of SEK – 4.9 (–5.1) billion.
  • The Fund posted a net result for the year of SEK 11.7 (34.3) billion.
  • The Fund’s return on the total portfolio was 4.1 (13.3) percent, excluding commission fees and operating expenses. Including these costs, the portfolio generated a return of 4.0 (13.1) percent.
  • The relative return on the total portfolio, excluding alternative investments and costs, amounted to 0.9 (0.5) percent.
  • Operating expenses, expressed as a percentage of asset management costs, remained low and amounted to 0.07 (0.07) percent.
  • During the year the First and Second Swedish National Pension Fund together with TIAA-CREF have combined forces in a new joint venture to create a leading, pan-European office investment platform, Cityhold Office Partnership.
 Year in brief, key figures 2015.12.31 2014.12.31
Fund Capital at 31 Dec, SEK m 300 624 293 907
Net result, SEK m 11 661 34 315
Net outflows to national pension system, SEK m 4 944 5 120
Fund Capital at 1 Jan, SEK m 293 907 264 712
   
Asset management cost as share of operating expenses, %* 0.07 0.07
Asset management cost incl. commission fees, % 0.18 0.17
  
Return after expenses, % 4.0 13.1

Annualized return after expenses, 5 years, %** 8.0
Annualized return after expenses, 10 years, %** 5.7

* In the half-year report, the asset management cost ratio is shown on a full-year basis.
** In the half-year reports, annualised return is shown as 10.0 and 5.0 years respectively.

   
The English version of the AP2 Annual Report 2015 will be available at www.ap2.se from end 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.


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