Sweden’s AP3 has overtaken peer AP4 following results for the first half of this year to become the largest of the national buffer funds behind the country’s first-pillar income pension.
The Stockholm-based fund reported a total return after expenses of -7% last week, bringing its total fund capital down to SEK464.9bn (€43.49bn) from SEK502.3bn at the end of 2021.
However, the first-half loss was narrower than those recently reported by its peers AP1 and particularly AP4. This has led to AP3 now ranking as number one out of the four largest buffer funds in terms of total assets.
Only the Gothenburg-based buffer fund AP2 beat AP3 on returns in the first half this year, with AP2 having posted a 6.2% loss for the period.
AP4, which suffered a 12.6% loss on investments in the latest six-month period, was the largest of the four funds at the end of 2021.
Kerstin Hessius, outgoing chief executive officer of AP3, said: ”The rapid reversal from 2021, which ended on a positive note, has been a bruising first half of the year on the financial markets, with both equities and bonds seeing negative returns.
“Given these circumstances, AP3 has achieved relatively good results, with a return of -7% after costs,” she said.
Hessius, who is due to leave AP3 in the late autumn after 18 years in the fund’s top job, will be replaced by Staffan Hansén, who is currently CEO of Storebrand-owned occupational pensions firm SPP Pension & Försäkring.
“It is with confidence that I hand over a professional organisation, with highly-skilled employees and a strong portfolio that is well positioned to contribute to the pension system going forward,” Hessius said.
In Norway, the domestic and Nordic investment arm of the country’s sovereign wealth fund – the Government Pension Fund Norway (GPFN) – reported a 5.4% investment loss between January and June this year.
The much larger Government Pension Fund Global was reported by its manager Norges Bank Investment Management earlier this month as having sustained a 14.4% loss on its NOK12trn (€1.2trn) international portfolio for the period.
Folketrygdfondet which runs the GPFN, said the 5.4% loss had been 0.5 percentage points better than the market, and that the fund’s total capital had ended June with a value of NOK315bn.
Kjetil Houg, CEO of Folketrygdfondet, said: “It was a weak result for the portfolio, but high oil prices led to the Norwegian stock market doing better than the global ones.
“We are satisfied that our investment choices contributed to a better return than the market,” he said.
Elsewhere in Norway, KLP – the largest provider of municipal pensions – reported a 2.1% loss for the first half, with total assets having increased by NOK20.9bn between January and June, ending the period at NOK727.6bn.
Sverre Thornes, KLP’s CEO, said rising inflation and higher interest rates were affecting the global economy, which had resulted in substantial movements in financial markets.
“We have solid financial buffers which safeguard customers’ savings during periods of negative market movements,” he said.
Thornes said fast-rising interest rates had an immediate impact on the valuation of its bond portfolio in the six-month this period.
“This also means that forthcoming yields in bonds will add value to future results and our long-term financial strength,” he added.
Read the digital edition of IPE’s latest magazine
No comments yet