SWEDEN - AP1 saw its assets rise by a benchmark-beating SEK19.8bn (€2.1bn) to SEK207.1bn over 2006.
The performacne resulted ina net investment income of SEK18.2bn, 0.6% above the benchmark.
AP1 MD William af Sandeberg described 2006 as a “good year” for the fund, whose strong performance was attributed to a sustained high proportion of equities, rising stock markets and successful returns from active management.
“Another source of satisfaction is that we once again outperformed our strategic benchmark, by a total of 0.6%, corresponding to more than SEK1bn in investment earnings. This means that since 2004 we have contributed around SEK3.5bn to the pension system through skilful asset management.”
The fund’s SEK18.2bn income was equal to a total return of 9.8% before expenses.
All of the fund’s allocations saw positive outcomes - internal fixed-income management, strategic and tactical asset allocation, foreign exchange management and equities all outperformed their benchmark indexes. The same applied to the portfolios managed externally on behalf of the fund.
At December 2006, AP1 had net assets under management of SEK207.1bn.
Over last year, the fund’s exposure to the fixed income market (38% of total exposure) was below that for the strategic benchmark, while exposure to the equities market (60%) was higher. The fund’s currency exposure was 16%.
“Our very positive results in the past four years has provided a valuable reinforcement to the Swedish pension system. After six years in operation it is satisfying to note that our average annualized return has risen to 5.1% after expenses, which is in line with the requirements placed on the buffer funds to ensure the long-term stability of Sweden’s pensions,” af Sandeberg concluded.
Partner Insight: In recent years, pensions administrators have seen scheme member engagement increase significantly. The advent of Pensions Freedoms in 2015 and the increased choices faced by members have led to a sea-change in the levels and types of...
Purna Bhudia looks at how the PPF's investment strategy has evolved, especially in the area of credit
Two consultancies have reported decreases in defined benefit (DB) transfer quotation requests in Q3, and said guaranteed minimum pension (GMP) equalisation could impact transfer activity.
The Association of Consulting Actuaries (ACA) and Royal London have proposed a "pensions pound" to "radically simplify" defined benefit (DB) pensions rights.