Third Swedish National Pension Fund reports strong result for first half of 2019
Press release
August 22, 2019
The first six months of the year brought solid growth in the AP3 portfolio as equity markets recovered swiftly from the sharp downturn in the last quarter of 2018. AP3 recorded a net result of SEK 36,511 million for the six months ended 30 June. The total return was 10.8% after expenses.
AP3 CEO Kerstin Hessius commented: “Equity markets made the largest single positive contribution – 10.8% – to overall return and the Fund’s real estate investments also performed strongly.”
AP3 has adopted new ambitious sustainability targets for the period 2019-2025. The Fund engages widely with stakeholders via the AP funds’ Council on Ethics. During the period, this work focused especially on collaborative investor efforts to improve safety at tailings dams and on social media responsibility.
During the spring, AP3 partnered with AP1 and AP4 to found Polhem Infra, an investment firm that will focus on unlisted sustainability-focused Swedish infrastructure companies. This will bring long-term benefits both for the pension system and the wider community.
Highlights 1 January – 30 June 2019 – Results and payments
- AP3 recorded a net result of SEK 36,511 million (11,165) for the first six months of 2019.
- The total return was 10.8% (3.3) before expenses and 10.8% (3.3) after expenses. The Equities and Inflation risk categories made the largest contributions to this performance.
- The annualised asset management cost ratio was 0.10% (0.09), of which operating expenses totalled 0.06% (0.06).
- Fund capital rose to SEK 374,138 million (340,668 at 31 Dec 2018), an increase of SEK 33,470 million.
- SEK 3,040 million (3,320) was paid from fund capital to the Swedish Pensions Agency in the first half of 2019 to cover the difference between paid-in pension contributions and outgoing pensions and to meet pension system costs.
- AP3 has generated an annual average return of 8.6% over the last five years and 9.1% over the last 10 years.
- Return underperformed the LSP benchmark portfolio by 0.8 percentage points during the period.
Summary of AP3’s interim results at 30 June 2019
| 30-06-2019 | 30-06-2018 | 31-12-2018 | |
|---|---|---|---|
| Fund capital at 30 June, SEK bn | 374.1 | 353.1 | 340.7 |
| Net result for the period, SEK bn | 36.5 | 11.2 | 2.2 |
| Net payment to the pension system, SEK bn | 3.0 | 3.3 | 6.8 |
| Fund capital at 1 January, SEK bn | 340.7 | 345.2 | 345.2 |
| Return after expenses, % | 10.8 | 3.3 | 0.6 |
| Real return after expenses, % | 9.9 | 2.2 | -1.4 |
| Asset management cost ratio, operating expenses, percentage of assets under management* | 0.06 | 0.06 | 0.06 |
| Asset management cost ratio, commission expenses, percentage of assets under management* | 0.04 | 0.03 | 0.03 |
| Total asset management cost ratio, percentage of assets under management* | 0.10 | 0.09 | 0.09 |
| Annualised return after expenses, 5.0 yrs, %** | 8.6 | 10.1 | 7.8 |
| Annualised return after expenses, 10.0 yrs, %** | 9.1 | 7.3 | 8.5 |
| Annualised real return after expenses, 10.0 yrs, %** | 7.9 | 6.5 | 7.4 |
* The interim report measures the asset management cost ratio on a full-year basis
** The interim report also shows annualised return for 10.0 and 5.0 years respectively
For further information please contact:
Kerstin Hessius, CEO Third Swedish National Pension Fund (AP3) +46 8 555 17 100
Lil Larås Lindgren, Head of Communications AP3 +46 709 517 223, lil.lindgren@ap3.se
AP3 is one of five funds that serve as a capital buffer for the Swedish state pension system. The Fund had SEK 374.1 billion of assets under management as at 30 June 2019. AP3 is tasked by Parliament with generating maximum possible benefit for the pension system by managing its fund capital so as to deliver strong investment returns at a low level of risk. www.ap3.se