Turbulence on financial markets during the secod half of 2011 had a negative affect on results

• Fund capital stood at SEK 214,106 million at 31 December, a decrease of SEK 6,723 million from the prior year. The change in fund capital includes payments of SEK 1,240 million to the pension system.
• AP3 recorded a loss of SEK 5,483 million (profit: 18,331) in 2011.
• The total return was -2.4% before expenses and -2.5% after expenses.
• The year was marked by the debt crisis in Europe, political turmoil in North Africa and the Middle East, the earthquake in Japan and slower economic growth in the United States. These factors combined to create uncertainty and weakness on financial markets.
• Since inception in 2001, AP3 has generated a nominal annual return of 3.4%. This is higher than the increase in the income index (3.1%), which is used as the basis for pension indexation. The real annual return (minus inflation) during this period stands at 1.7%.

-          AP3 has contributed positively to the pension system since inception 2001, but we cannot be satisfied because we have yet to reach our target of a 4% real return per annum over time. It is, of course, a major challenge to try to generate a real return of 4% when safe bond yields are below 2% – lower even than the Swedish Central Bank’s inflation target. This makes it doubly important to have alternative investment options, says Kerstin Hessius, CEO AP3.

-          Income in 2011 was adversely affected by a low weight in US equities and short duration in the fixed income portfolio. The equities risk category contributed -5.3 percentage points to total return. Our alternative investments, private equity and real estate, continued to show a positive trend, she adds.

The annual report in Swedish and a short version of the annual report in English can be downloaded from www.ap3.se. The complete English annual report will be published mid March.

For more information please contact:

Kerstin Hessius, CEO, telephone: +46 8 555 17 100, kerstin.hessius@ap3.se

Christina Kusoffsky Hillesöy, Head of Communications & Sustainable Investments,
telephone: +46 709 517 223, christina.hillesoy@ap3.se

AP3 manages SEK 214.1 bn of the buffer fund capital in the Swedish public pension system. The Fund´s mandate from the Swedish Parliament to generate the best long-term return on capital in relation to our liabilities in the pension system. To achieve this we have built a focused and professional asset management organisation. Our vision is to combine best-practice from asset managers worldwide with the latest thinking in financial theory. Read more about us on www.ap3.se.