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Equities and Alts Propel AP1’s Record Return

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Stockholm (HedgeNordic) – The Swedish National Pension (AP) Funds, AP1-AP4, achieved record profits of SEK 316 billion in 2021. The AP Funds’ average return for the year was 19.3 percent after expenses. Första AP-fonden (AP1)’s 2021 return after expenses reached 20.8 percent, its highest figure in the 20-year history of AP1. Although equity investments contributed to more than half of the pension fund’s returns in 2021, investments in venture capital and hedge funds performed best in percentage terms, reaching annual returns of 50.7 percent and 36.9 percent, respectively.

“We are delighted to report the highest return and net investment income in our 20-year history on the capital that has been entrusted to AP1 by today’s and tomorrow’s Swedish pensioners,” comments Kristin Magnusson Bernard, the CEO of Första AP-fonden (AP1). AP1, one of the five buffer funds in the Swedish national income pension system, reported a net investment income of SEK 80.7 billion in 2021 and saw its net assets increase to SEK 465.8 billion at the end of 2021 from SEK 392.6 billion a year ago.

“We are delighted to report the highest return and net investment income in our 20-year history on the capital that has been entrusted to AP1 by today’s and tomorrow’s Swedish pensioners.”

AP1’s allocation to equity investments, which accounted for 61.4 percent of the pension fund’s total portfolio at the end of 2021, returned 24 percent last year to add SEK 48.5 billion in asset gains. The real estate allocation, which represented 15.2 percent of the fund’s total portfolio, returned 27.2 percent in 2021 to add SEK 14.7 billion in asset gains. The pension fund’s fixed-income investments, amounting to SEK 106.9 billion or 22.9 percent of the total portfolio, returned a negative 1.6 percent in 2021.

“Some hedge funds were closed during the year, which contributed to a reduction in the total exposure of the hedge fund portfolio.”

AP1’s 6.0 percent allocation to venture capital returned 50.7 percent in 2021, contributing SEK 9.4 billion to the portfolio during the year. The pension fund’s small allocation to hedge funds, which amounted to SEK 3.9 billion at the end of last year, returned 36.9 percent in 2021 to contribute with SEK 1.4 billion in asset gains. AP1’s exposure to hedge funds decreased to 0.8 percent at the end of last year from 3.8 percent at the end of 2020 as some hedge funds closed during the year. “Some hedge funds were closed during the year, which contributed to a reduction in the total exposure of the hedge fund portfolio,” writes AP1 in its annual report.

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Eugeniu Guzun
Eugeniu Guzun
Eugeniu Guzun serves as a data analyst responsible for maintaining and gatekeeping the Nordic Hedge Index, and as a journalist covering the Nordic hedge fund industry for HedgeNordic. Eugeniu completed his Master’s degree at the Stockholm School of Economics in 2018. Write to Eugeniu Guzun at eugene@hedgenordic.com

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