With a positive profit of SEK 20 billion the Fourth Swedish National Pension Fund (AP4) increased fund capital to SEK 310 billion in 2015. Total return amounted to 6.8 percent after expenses. Active management outperformed the Index for the seventh consecutive year.
– It is gratifying that AP4 continues to deliver good long-term total returns. Over the past ten years returns have averaged 6.7 percent per year after costs, which corresponds to a real return of 5.5 percent per year, says Mats Andersson, CEO of the Fourth AP Fund.
– AP4's experienced managers have outperformed the index for the seventh consecutive year. Over the past seven years the contribution has amounted to nearly SEK 8 000 million, which can be set against an annual cost to pursue active management of approximately SEK 100 million, says Mats Andersson.
– AP4 further increased its low-carbon investments during 2015 reducing climate risk in the equity portfolio, says Mats Andersson. During the year, ahead of the climate summit COP21 in Paris and in close collaboration with the UN among others, AP4 brought together asset managers worldwide that measure, disclose and reduce their carbon footprint in investments. The established goals were exceeded, continues Mats Andersson.
– We are also glad that AP4's management approach earned recognition during 2015 and once again received international awards for our work, concludes Mats Andersson.
- Fund capital increased to SEK 310 (295) billion and profit amounted to SEK 20 (40) billion. During the past three years, the total profit amounted to SEK 98 billion.
- Total return after expenses amounted to 6.8 (15.7) percent. Total return before expenses amounted to SEK 6.9 (15.8) percent.
- Management costs remain low both in domestic and international comparisons. The expense ratio - operating expenses - amounted to 0.06 (0.07). Including commission fees, the ratio amounted to 0.11 (0.11) percent.
- Foreign exchange exposure was 27.0 (28.1) percent at year-end.
- During 2015 AP4 paid SEK 4.9 (5.1) billion of net Fund assets to the pension system as a contribution to cover the shortfall between payments and receipts in the system. Since 2009 AP4 has in total paid close to SEK 30 billion of Fund assets to the pension system when the pension system's net flows were negative.
|YEAR IN BRIEF, KEY FIGURES||2015-12-31||2014-12-31|
|Fund Capital (closing balance, 31 Dec), SEK BN||310.0||294.9|
|Profit, SEK BN||20.1||40.2|
|Net payments to the pension system, SEK BN||-4.9||-5.1|
|Fund Capital (opening balance, 1 Jan), SEK BN||294.9||259.7|
|Expense ratio - operating expenses, % of AuM||0.06||0.07|
|Expense ratio - operating expenses and commission fees, % of AuM||0.11||0.11|
|Return after expenses, %||6.8||15.7|
|Annualized return after expenses, 5 yrs., %||9.7||10.5|
|Annualized return after expenses, 10 yrs., %||6.7||7.6|
Stockholm February 19, 2016
The Fourth Swedish National Pension Fund Annual Report 2015 can soon be read and downloaded in English at www.ap4.se.
The Fourth Swedish National Pension Fund (AP4) is one of five buffer funds in the Swedish pension system. AP4's mission is to manage Fund capital to maximize shareholder value over time, thus contributing to the stability of the pension system. AP4's sustainability focus areas are Climate Change and Corporate Governance. As of December 31, 2015 Fund capital amounted to SEK 310 billion.