A profit of over SEK 31 billion increased the Fourth Swedish National Pension Fund’s (AP4) fund capital to SEK 334 billion in 2016. This amounted to a return of 10.0 percent after expenses. AP4 exceeded both the income index and the long-term return target.
- Over the past 10 years, AP4 has had an average annual return of 6.7 percent after expenses. Adjusted for inflation, this is equivalent to a real return of 5.5 percent, which is above the long-term target of 4.5 percent. Even when measured since the start of the pension system in 2001, the average real return of 4.6 percent per year exceeds the long-term target. Over time, AP4 also returned more than the income index, which means that AP4 has positively contributed to the financial strength of the pension system, says Niklas Ekvall, CEO AP4.
- AP4 mandated an independent comparison of the cost effectiveness of the operations. The result shows that AP4’s capital is managed at a significantly lower cost than the average for comparable pension funds globally. The consulting company CEM, that measures and compares the cost effectiveness of pension funds globally, conducted the survey. AP4 has a strong focus on delivering the highest possible return after costs. For this reason, it is very satisfying to get our low cost verified by an external independent comparison, says Niklas Ekvall.
- AP4 continues to focus on sustainability in the investments. It's an ongoing effort, which is under constant development. Our investments in low-carbon strategies that reduce climate risk in assets now amounts to 24 percent of the global equity portfolio. The goal is to continue to increase these investments in volume and even expand with new sustainable investments that can decrease the risk in the assets with equal or better returns, says Niklas Ekvall.
|Year in brief, Key Figures||2016||2015||2014||2013||2012|
|Profit, SEK bn||30,5||20,1||40,2||37,0||23,4|
|Net payments to the pension system, SEK bn||-6,6||-4,9||-5,1||-6,9||-3,8|
|Fund capital, year end, SEK bn||333,9||310,0||294,9||259,7||229,6|
|Total return after expenses, %||10,0||6,8||15,7||16,4||11,2|
|Annualized return after expenses, 5 yrs., %||12,0||9,7||10,5||11,6||3,3|
|Annualized return after expenses, 10 yrs., %||6,7||6,7||7,6||7,2||7,2|
|Management cost to operating expense ratio, % of AuM||0,06||0,06||0,07||0,08||0,08|
|Operating costs and commission fees to Operating expense ratio, % of AuM||0,10||0,11||0,11||0,11||0,10|
- Fund capital increased to SEK 334 (310) billion and net income amounted to SEK 31 (20) billion. During the past three years, the total profit amounted to SEK 91 billion;
- Total return after expenses was 10.0 (6.8) percent. Total return before expenses amount to 10.1 (6.9) percent;
- Management costs are still low, in both domestic and international comparisons. The management cost ratio for operating expenses amounted to 0.06 (0.06) percent, and including commission fees the ratio amounted to 0.10 (0.11) percent;
- The currency exposure amounted to 26,9 (27,0) percent at year end;
- In 2016 AP4 paid out SEK 6.6 (4.9) billion net of fund capital as contribution to cover the deficit between payments and receipts in the pension system. Since net flows to the pension system turned negative, AP4 has paid in total SEK 37 billion of the fund’s capital to the pension system.
Stockholm, February 22, 2017
The Fourth Swedish National Pension Fund (AP4) 2016 Annual Report in English will be published in the near future. The Annual Report in Swedish can be found at: www.ap4.se
For more information, please contact:
Niklas Ekvall, CEO AP4, tel.: 08-787 75 51
Pia Axelsson, Communication, tel: 08-787 75 72
The Fourth Swedish National Pension Fund (AP4) is one of five buffer funds in the Swedish pension system. AP4's mission is to generate maximum sustainable returns over time, thus contributing to the stability of the pension system. AP4's focus areas are Sustainability and Corporate Governance. As of December 31, 2016, fund capital amounted to SEK 334 billion.