Folksam CIO says tactics paid off in 2020, with 4.7% return

Swedish pensions and insurance group Folksam has posted a 4.7% full-year return for its life and pensions unit Folksam Liv, alongside 4.8% for its municipal pension fund subsidiary KPA, saying its timing of equity trades had boosted returns.

Michael Kjeller, head of investment and sustainability, said: “Against the background of the pandemic and its effects on the global economy, the return for 2020 is remarkably good.”

He said what drove the return above all last year was the strong development on stock markets, where global equities in local currency had risen by around 15% on average.

Kjeller added: “But it was also true – perhaps more so than in previous years – that tactical decisions in our investment management affected the return in a positive direction.”

Giving two examples of this, he said that Folksam had sold and bought equities at advantageous times, and that the firm’s investment operation had been in a good position to take advantage of the strong returns generated by sustainable assets.

“This was a strong trend, large capital flows are being directed precisely towards sustainable investments,” he said.

Within the Folksam Liv results, Kjeller said the occupational pension portfolio returned 5.2% last year, and the rest of its life insurance portfolio generated 4.0%.

Contributions to Folksam Liv fell in 2020 to SEK39.6bn (€3.9bn) from SEK41.4bn the year before, according to the annual results announcement.

Total group total assets under management — which include those of Folksam’s general insurance division – rose to SEK483bn from SEK455bn at the end of 2019, Folksam reported.

Unit-link assets grew to SEK194bn from SEK176bn a year before, despite a halt in transfers and lower sales, it said.

Separately, the company’s unit-link occupational pensions subsidiary Folksam LO Pension – where savings are mostly invested in funds managed by Swedbank Robur – reported a total return of 9.7%, compared with 24.3% at the end of 2019, with its solvency ratio rising to 7.7% from 6.6% the year before.

Total assets under management at the scheme, which is 51% owned by Folksam, grew to SEK135.5bn from €118.6bn a year earlier.

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