Sweden’s Second AP Fund made a return of 10.2 per cent in the first half of 2021, after expenses, its best half-year result ever.

At the end of the first half, the fund’s profit amounted to SEK 39.2bn and the fund’s assets stood at SEK 421.2bn. AP2’s private equity portfolio contributed to the strong performance, with a return of 39.7 per cent. Its return relative to the benchmark index was 0.4 per cent, excluding alternative investments and costs.

Commenting, AP2 CEO, Eva Halvarsson, said: “Our profit of SEK 39.2bn is the best half-year result ever achieved by the fund. It is also pleasing to note that our efforts to reduce costs have had an effect and that we have the lowest-ever total management cost ratio. Macroeconomic growth in the half-year was characterised by a gradual economic recovery after the sharp cyclical decline in 2020 as a consequence of the pandemic.”

She added that primarily it was the fund’s equity portfolios and the portfolio of private equity funds that gave the strongest returns during the first half-year. AP2’s Swedish and foreign equity portfolios in developed countries achieved returns of 22.3 per cent and 17.2 per cent, respectively. Emerging market equities appreciated by 14.8 per cent and private equity funds gave a return of no less than 39.7 per cent.

“AP2’s return exceeds the fund’s expected long-term real return of 4.5 per cent per year. Over the past 10 years, the fund’s real return has averaged 7.5 per cent,” Halvarsson noted.

“A number of changes were made to the portfolio during the first half-year. As a consequence of the fund’s process for managing risks associated with human rights abuses, it was decided that a number of countries will no longer be included in the emerging-market bond index.

“The sustainable infrastructure portfolio is being developed and a number of commitments and investments were made. These included the investment in Northvolt AB through the AP Fund-owned (AP1, AP2, AP3, AP4) company 4 to 1 Investments,” Halvarsson concluded.

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