Sweden’s Första AP-fonden’s (AP1) made a return of 11 per cent before expenses in the first half of 2021, it has reported.

The figure after expenses stands at 10.9 per cent, for a half year that was characterised by high global capital market activity backed by a rapid economic rebound and strong risk appetite.

A total of SEK 4.2bn was transferred to the income pension system and at the end of June 2021 the Fund had assets under management of SEK 431.5bn.

AP1 CEO, Kristin Magnusson, said: “As a long-term investor with a strong balance sheet, AP1 has good capacity to bear risk effectively. The fund’s constructive view of risk-taking was well rewarded financially during the first six months of the year.

“We have been well-positioned to benefit from the prevailing market situation, and most asset classes in the portfolio contributed positively. Our considerable exposure to global and Swedish equities, where especially the latter have shown outstanding performance year-to-date, was the main return driver, although real estate and other alternative investments also contributed positively.”

In terms of sustainability, AP1 noted that green investments continue to be the dominant theme and it is “fully focused” on utilising this trend to fulfil its objectives.

During spring 2021 AP1 invested in Northvolt jointly with AP2, AP3 and AP4, for a total of USD 400m. Magnusson said this is a “good example” of how AP1 as a long-term investor can invest in companies who might serve as a transformative and profitable force in the global climate transition and thus contribute positively both to the Swedish income pension system and to society at large.

“While risk-taking has been rewarded financially during the spring, the overall upwards market direction has not been without its hiccups. A key tug-of-war originated in diverging views of future inflation developments, especially in the U.S. Where some investors see major risks for overheating from huge monetary and fiscal stimulus measures, others consider those issues negligible and expect instead that low-for-long interest rates will enable of large-scale investments, increased employment and value creation.

“Valuations in certain market segments have at times seemed potentially exaggerated, but over time market and valuation froth has subsided in a controlled manner. At AP1 we look forward to an exciting remainder of the year, where we aim to respond nimbly to changes in market direction while being firmly focused on our long-term mission: to create high returns through exemplary asset management, at low cost,” he said.

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