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AP3, Third Swedish National Pension Fund, reports strong results for 2016

Highlights of 2016

  • AP3 reported a net result of SEK 27,981 million (19,643) for the 12 months ended 31 December 2016.
  • Return totalled 9.5% (6.9) before expenses and 9.4% (6.8) after expenses.
  • The risk categories Equities, Inflation (including real estate) and Currencies made the largest positive contributions to income.
  • AP3 made payments of SEK 6,637 million (4,944) to the pension system during the year.
  • Fund capital at year-end stood at SEK 324,375 million (303,031).
  • The asset management cost ratio was 0.12% (0.12), of which operating expenses were 0.06% (0.06).
  • The Fund outperformed the benchmark LSP portfolio, by 2.3 percentage points. Return has outperformed the LSP by an annual average of 3.3 percentage points in the last five years.
  • AP3 more than doubled its holdings of green bonds, from SEK 4.5 billion to SEK 9.5 billion.
  • The Fund recorded a further decrease in the carbon footprint of its portfolio holdings.
  • Since inception in 2001, AP3 has recorded an annual average return of 4.4% in real terms (after allowing for inflation), which is higher than the Fund’s 4% target.

Kerstin Hessius, AP3 CEO, said: “A net result of SEK 28 billion is a strong performance, especially considering the weak performance of equity markets in the first six months of the year. We also made a substantial contribution to the pension system by delivering a return that exceeded the income index by 7.6 percentage points.”

AP3’s average annual return on capital since inception in 2001 stands at 5.7% after expenses. The income index, the benchmark used to keep pensions and pension credits in line with inflation, increased by an annual average of 3.0% during this period.

Hessius added: “During the year we also cemented our position as one of the largest Nordic investors in green bonds by doubling our holdings. At year-end, this portfolio was worth SEK 9.5 billion.”

Summary of AP3’s results 2016:

 AP3 key data 2016 2016 2015
Fund capital at 31 Dec, SEK m 324 375 303 031
Net result for the year, SEK m 27 981 19 643
Net flow to the pension system, SEK m -6 637 -4 944
Fund capital at 1 Jan, SEK m 303 031 288 332
Asset management cost ratio – operating expenses, % 0.06 0.06
Asset management cost ratio incl. commission expenses, % 0.12 0.12
Return after expenses, % 9.4 6.8
Annualised return after expenses, 5 years, % 10.9 8.4
Annualised return after expenses, 10 years, % 5.7 5.7

 

Download the 2016 Swedish annual report here: Årsredovisning_2016

The AP3 Annual Report and Sustainability Report 2016  will be published in English during March 2017. Read more about AP3 at www.ap3.se.

 

For further information, please contact: Kerstin Hessius, CEO, +46 855517100 Lil Larås Lindgren, Head of Communications, +46 855517123, lil.lindgren@AP3.se

AP3 is one of five funds that manage capital on behalf of the Swedish state pension system. The Fund had SEK 324.4 billion of assets under management as at 31 December 2016. AP3 is tasked by Parliament with generating maximum possible benefit for the pension system by managing its fund capital in order to deliver strong investment returns at a low level of risk.

AP3’s average annual return on capital since inception in 2001 stands at 5.7% after expenses. The income index, the benchmark used to keep pensions and pension credits in line with inflation, increased by an annual average of 3.0% during this period.