Sweden’s AP2 – one of five buffer funds in the first-pillar income pension system – made a 6.7% loss on investments last year, but did beat its benchmarks, according to the fund’s annual report published today.
The Gothenburg-based fund revealed overall assets fell to SEK407.1bn (€35.3bn) by the end of December last year, from SEK441.0bn a year before, after the SEK29.2bn investment loss and a transfer of SEK4.7bn into the national pension system.
Eva Halvarsson, AP2’s chief executive officer, said: “Both equities and fixed income assets fell in value, partly due to higher interest rate levels.
“However, AP2’s portfolio showed resilience and reversed by a relatively moderate -6.7% compared with OMX Stockholm, which declined by approximately -13% during the same period, while global indices such as MSCI World (excluding currency effects) fell by approximately -16%,” she said.
With a return of 5.1%, Halvarsson said AP2’s non-listed assets had performed better than the fund’s listed assets, “which was also in line with our expectations”, she said.
AP2 said its relative return had been 0.3 of a percentage point, with Swedish equities management having outperformed the benchmark index by 2.9 percentage points.
However, the buffer fund’s annual report showed that Swedish equities – which have a 9% portfolio weighting – had still lost 20.6% over the year.
The fund also released its 2022 sustainability report today, in which it outlined further steps it had taken regarding its forestry investments – namely defining 10 criteria that had to be met for them to be considered sustainable.
“The 10 criteria mean, among other things, that managers of timberland assets must have a comprehensive and externally-published policy for responsible investments, that timberland assets must be managed in a sustainable way that is verified by a third party under a certification scheme, and that all managers of timberland assets must integrate TCFD (Task Force on Climate-Related Financial Disclosures) recommendations into their reporting,” Halvarsson said.
The fund reported a return of 14.5% return including currency hedging last year for its forestry assets – a sub-portfolio it started building up in 2010.
AP2’s main peers – the other three large buffer funds in the system AP1, AP3 and AP4 – are due to release their annual results next week.
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