Sweden’s AP4 national pensions buffer fund today reported an -11.9% investment loss for last year – a return that fell nearly four points below its benchmark and lost the fund its previous size lead over its three peers.
As the final big-four buffer fund backing the main part of the Swedish state pension to report 2022 results, AP4 said this morning that fund capital plummeted to SEK460.5bn (€41.8bn) at the end of December from SEK527.6bn a year earlier.
Apart from the SEK62.5bn investment loss, money also flowed out of the Stockholm-based fund last year in the form of a SEK4.7bn into the income pension system – the same level of contribution as made by AP1, AP2 and AP3.
The figures released confirm AP4 is now the second-largest of the four funds, with AP3 having taken over its previous position as the biggest – a change in the ranking already apparent at the half-year stage.
AP3 ended 2022 with SEK468.4bn, having lost half as much as AP4 in percentage terms last year.
Back in 2001 when the four funds were given their current mission, they were given equal amounts of capital.
Niklas Ekvall, AP4’s chief executive officer, said of the 2022 results: “In this context it is important to note that AP4 is a very long-term investor.
“Measured over a slightly longer time perspective, including 2021, AP4’s portfolio has generated a positive result of more than SEK23bn,” he said.
Equities, which make up 51.7% of AP4’s portfolio, ended with losses, according to the annual report. Global equities made a 19.0% loss in the year, while Swedish equities lost 31.2% and defensive equities ended the year down 3.6%.
Foreign exchange was AP4’s only investment category to produce a positive result, with a 2.9% gain.
AP4 said its active management had reduced the portfolio’s return for 2022 by 3.8 percentage points in relation to the fund’s reference portfolio, the Dynamic Normal Portfolio (DNP), which is determined by the board.
The buffer fund’s equities’ management had underperformed, though fixed income management had outperformed that benchmark, the fund said in the report.
However, real assets had made the biggest negative contribution to active returns, AP4 said, since unlisted property companies and infrastructure investments – which make up the bulk of the asset class – are measured against CPI plus three percentage points.
“Against the background of the high rate of inflation in 2022 the asset class’ return target rose significantly to 15.7% by 2022, compared to an average of 7.1% per year for the last five years,” the fund said in the report.
To read the digital edition of IPE’s latest magazine click here
No comments yet