The Second AP Fund has over the past decade generated an average annual return of 7 percent
The Second AP Fund (AP2) posted a total return of 5.2 percent, excluding costs, for the first half of 2015. Relative to benchmark index, return was 0.2 percent, excluding alternative investments and costs. Fund capital increased by SEK 12.6 billion to SEK 306.5 billion by June 30 2015.
• The Second AP Fund’s assets under management totalled SEK 306.5 (280.3) billion on June 30 2015, against which net outflows to the national pension system were charged in an amount of SEK -2.4 (-2.5) billion.
• The Fund posted a first-half net result of SEK 15.0 (18.1) billion.
• The Fund’s return on the total portfolio was 5.2 (7.0) percent, excluding commission costs and operating expenses. Including these costs, the portfolio generated a return of 5.1 (6.9) percent.
• The relative return on the portfolio of quoted assets, excluding alternative investments and costs, amounted to 0.2 (0.1) percent, corresponding to a net contribution of SEK 0.5 billion.
• Operating expenses in terms of asset management costs continued to be low, remaining unchanged at 0.07 (0.07) percent for the period.
• Over the past ten years, the Fund has generated a return on invested assets of 96.6 percent (excluding costs), corresponding to an average annual return of 7.0 percent. Less inflation, this is equivalent to an annual real return of 5.8 percent.
• Since its inception in 2001, the Fund has generated an overall return of SEK 178.7 billion, corresponding to an average annual return of 5.7 percent, including costs.
• The Fund’s level of currency exposure was 30 (25) percent.
“In the past ten years, the Fund has generated a total return of SEK 155 billion on investment. This is equivalent to an average annual return of 7.0 percent. Less inflation, this corresponds to an annual real return of 5.8 percent, exceeding our targeted long-term return by a considerable margin. Our fund capital totalled SEK 306.5 billion, a new record” states Eva Halvarsson, CEO of the Second Swedish National Pension Fund.
“During the first half of the year, we have maintained our strategy of managing an ever greater share of Fund capital in-house, by taking responsibility for the management of global credits. Increasing the percentage of assets managed in-house is cost efficient, while also enabling more effective operational control. This in turn contributes to developing the operation, as well as the net result,” states Eva Halvarsson.
Events after close of report period
• Following the close of the report period, the financial markets have experienced some turbulence. This derives mainly from anxiety over prospects for growth especially in China and the potential impact on the global economy. So far, these factors have occasioned no changes in the Fund’s portfolios. The Fund’s long-term strategy, based on a well-diversified portfolio, remains unchanged.
• AP2 has together with American pension fund TIAA-CREF and AP1 reached an agreement concerning the formation of a new joint company. The company will act as a platform for investment in European office properties. The properties owned by Cityhold Property AB – a real-estate company which we formed with AP1 in 2011 – and TIAA-CREF’s European portfolio of commercial real estate in THRE will be combined to form the joint company, Cityhold Office Partnership. The joint market value of these two real-estate portfolios currently totals more than EUR 2 billion.
The complete half-year report (pdf)
A Sustainability Report will be published separately in October.
For further details, please contact CEO Eva Halvarsson, Second Swedish National Pension Fund, or Ulrika Danielson, Head of Corporate Communications, on +46 31 704 29 00.