​AP7 posts 27.3% return after ‘fantastically good year’

Sweden’s largest national pension fund AP7 reported a 27.3% return in 2024 on the default premium pension product Såfa it runs, as the fund’s chief executive officer said the world had changed for the worse, but it had been a “fantastically good year” for investment gains.

The pension fund’s total assets grew to SEK1.44trn (€127bn) by the end of 2024 from SEK1.11trn a year before, according to data on the fund’s website.

The Såfa return derives from the returns generated by the two building-block funds behind the lifecycle product – the equity fund and the fixed income fund – which produced 29.8% and 3.1%, respectively, in 2024, the data show.

Pål Bergström, AP7’s CEO, said in a blog and video commentary on Tuesday: “2024 was a fantastically good year for AP7 and AP7 savers in terms of returns.

“It is a great development that we have had, and there are many reasons for that. Strong stock markets, leverage on that and then a weakened krona,” he noted, adding that the latter had been positive for returns since AP7 had many investments in foreign currency.

Despite the financial result, Bergström said: “But it is a bit difficult not to think about how the world has changed, honestly, for the worse during the year.

“There are more clouds of worry geopolitically and security-wise, I think,” he continued.

Chief investment officer Lena Fahlén said the economy had become a little clearer during the year, and interest rates had begun to fall.

“But geopolitically it was a very chaotic and uncertain year that I think somewhat clouds the view when we look at the whole,” she said.

Fahlén said the fund had two focus areas within its asset management for the current year.

“In our fixed income fund, we will expand the investment universe even further. We can now invest in bonds issued in euros and dollars – of course hedged to Swedish kronor.

“But we are also working on investing in corporate bonds,” she said.

Within the much larger equity fund, Fahlén said AP7 was implementing an internally managed transition mandate where it focused on financial returns and on driving climate change.

“Then, in parallel, we will continue to build up our alternatives portfolio with real estate and private equity,” she said.

AP7’s mandate was changed in 2023 to allow investment in alternative assets as well as equities and bonds.

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