AP2 returns 10.7 per cent in first half of 2019

Sweden’s AP2 fund returned 10.7 per cent in the first half of 2019 after costs.

Publishing its half year results, the fund revealed the total return was SEK 35.6bn, compared to SEK 9.8bn over the same period in 2018. The fund’s assets now total SEK 367.4bn. Relative to the benchmark index, the return was -0.4 per cent, excluding alternative investments and costs.

The funds return exceeds the long-term return assumption of 4.5 per cent annually. In the past 10 years the fund’s average annual real return has amounted to 8.1 per cent, its CEO Eva Halvarsson, CEO said.

AP2 explained that the positive results were attributed to a strong recovery in world markets at the beginning of 2019, after a major downturn at the end of 2018. However, this was followed by growing concern that global real economic growth may lose momentum.

This concern was amplified by uncertainties regarding Brexit and, in May and June, the escalating trade conflict between USA and China. “This political uncertainty seems to have played a part in a declining investment climate the world over,” Halvarsson said.

“In the first half of the year the fund adjusted its listed portfolio to the recent years' favourable growth in holdings of real estate and private equity funds by reducing the allocation to Swedish and foreign equities and Swedish bonds.

“In addition, the share of capital allocated to emerging-market bonds issued in US dollars increased. The board also decided that the fund shall no longer be invested in tobacco companies or companies that are involved in the maintenance and modernisation of nuclear weapons systems,” she said.

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