AP4 achieves H1 returns of 9.9% after stimulus boost

The Fourth Swedish National Pension Fund (AP4) achieved a return of 9.9 per cent after costs in the first half of 2021, with its fund capital having climbed by SEK 40.4bn to SEK 489.8bn.

The fund revealed that, during the same period, net payments from AP4 to the pension system totalled SEK 4.2bn, while the portfolio’s active return was higher than the return for AP4’s benchmark portfolio by 0.8 percentage points.

Currency exposure at the end of the period was 21 per cent of fund capital, unchanged since the beginning of the year.

The result for the first half of 2021 was SEK 44.5bn.

AP4 CEO, Niklas Ekvall, commented: “AP4’s asset portfolio generated a favourable return of 9.9 per cent during the first half of 2021 after costs following an equally solid return of 9.6 per cent for the full year 2020.

“These are historically favourable returns, but they should also be viewed against the background of the massive financial and monetary policy stimulus measures that were introduced across a broad front in 2020 and early 2021.”

He added that he was hopeful that the world was “successively emerging from the most acute part of the Covid-19 pandemic”, but accepted that hope for prolonged economic growth and concerns about bottlenecks and rising inflation were likely to result in “an uncertain market environment going forward”.

Ekvall also cautioned: “We should also expect to see lower returns on financial assets in the coming years compared to what we have seen in the last ten years.”

He concluded: “We are continuously developing our work on integrating sustainability in our investment activities, and one such area is thematic sustainability investments, where we are working systematically and proactively to identify investments that can generate favourable returns to the pension system while at the same time significantly contributing to the climate transition.

“During 2020 and the first half of 2021 AP4 made new investments in sustainable infrastructure, renewable energy and other parts of the energy transition of approximately SEK 10bn.”

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