Sweden’s AP1 returned 9.7% in 2020

Sweden’s Första AP-fonden (AP1) pension buffer fund made a return of 9.7 per cent in 2020, amounting to SEK 34.8bn.

In 2020, a total of SEK 7.9bn was transferred to the income pension system, leaving the fund with assets under management of SEK392.6bn at the end of 2020. During the year, costs were reduced by SEK 123m, a decrease of 29 per cent.

Commenting, AP1 CEO, Kristin Magnusson Bernard, said: “I feel extremely proud of the fund's employees who, with great commitment, have succeeded in delivering on all parts of our assignment – good returns, high cost-efficiency and sustainable value creation. During a challenging year, we have successfully managed the portfolio and adjusted and changed both our exposures and our way of working.”

In addition, the fund was able to reduce its equity portfolio carbon footprint by 46 per cent. Magnusson Bernard said AP1 has taken “great strides” on its sustainability work.

“The board's decision to de-invest companies with fossil fuels was implemented in 2020 and, in addition to reducing the financial risk, it has contributed to us reducing our carbon footprint in the listed equity portfolio by 46 per cent. During the year, all our management teams worked to further develop sustainability aspects in their mandates.

“We have driven development by placing demands on external managers to develop sustainable and fossil-free funds, which are also open to other investors. We have also set a goal of increasing our share of dedicated investments that promote sustainable development, which gives us good opportunities to continue to manage capital flows to sustainable companies. As a large owner, we have also conducted responsible corporate governance work.”

Looking ahead, AP1 said it sees a complex world with great uncertainty in the financial markets. For example, it highlighted the strong recovery on the world stock exchanges, which is in sharp contrast to the situation in the service sector and parts of the labour market.

“The very unevenly distributed effects of the pandemic are likely to affect us for a long time to come. How monetary policy and fiscal stimulus measures play out, as well as the impact of geopolitical tensions, will be crucial for business and markets going forward. Structural changes such as the ongoing digitalisation and the shift towards a climate-neutral economy will continue to be driving forces.

“Although we see an uncertain future ahead of us, we feel secure in our mission. By being a responsible investor with an active advocacy agenda, we create good returns and contribute to the transition to a sustainable society,” Magnusson Bernard concluded.

In total, the AP funds together delivered a result of SEK 124bn in 2020, which corresponds to an 8.1 per cent average return.

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