Return on the Fund’s net assets in 2008 was -21.7 percent, or SEK -47.7 billion, before commission costs and operating expenses and -21.9 percent after these costs and expenses. For 2007, return after expenses was 4.6 percent. Return on the listed portion of the portfolio, which makes up approximately 94.5 percent of the Fund’s net assets, was -22.4 percent. Alternative investments, consisting primarily of unlisted real estate and participations in private equity funds, returned
-3.5 percent.
Widespread uncertainty about economic development in the USA and its global spinoff effects led to heightened turmoil in the financial markets.
The financial crisis then escalated in the autumn, most markedly after the US-based investment bank Lehman Brothers declared bankruptcy on 15 September.
The large value loss in the portfolio is mainly a result of the global financial crisis, and particularly the year’s negative stock market development. The Fund’s estimated credit losses in 2008 are limited and amount to SEK 0.5 billion.
Foreign exchange and treasury, external management and fixed income investments all made a positive contribution to active return in 2008.
Equities
The Fund’s equity index returned -39.7 percent during the year. Return on the Fund’s equity investments was -40.1 percent, equal to a net investment loss of SEK 56.0 billion.
Fixed income
The Fund’s fixed income index produced a return of 7.8 percent in 2008. Return on the Fund’s bond portfolio was 8.3 percent, or SEK 5.8 billion before expenses.
Foreign exchange
Foreign exchange has a low correlation with other asset classes. The Fund has therefore chosen to maintain open currency exposure of around 20 percent in order to reduce volatility in total return over time. In 2008 currency exposure was increased by close to 2 percentage points. Because the Swedish krona weakened during 2008, the open position had a positive impact on the year’s investment earnings.
Alternative investments
This asset class is made up of unlisted real estate equities and participations in private equity and hedge funds. Alternative investments generated a return of -3.5 percent, equal to a net investment loss of SEK 0.3 billion for 2008. The negative contribution for the year was mainly attributable to holdings of real estate equities.
Five-year overview
At year-end 2000 the Fund was assigned assets worth SEK 134.0 billion. Over the period from 2001 to 2008 the Fund then received additional net contributions of SEK 20.9 billion from the pension system and liquidation funds. The total capital inflow thus amounts to SEK 154.9 billion. At the end of 2008 the market value of the Fund’s assets was SEK 171.6 billion. During the period from 2001 to 2008 the investments have yielded an annualized return of 1.2 percent after expenses. Cumulative investment income for the same period was SEK 16.7 billion. Return is strongly influenced by development in the stock markets. The stock market plunge of 2001–2003 was followed by a sharp upswing in 2004–2007, which was then replaced by a dramatic downturn during 2008.
Net investment income in 2008¹
|
|
Contribution SEK bn |
%-points |
|---|---|---|
| Equities, Swedish | -11.6 | -5.3 |
| Equities, non-Swedish² | -37.7 | -17.1 |
| Equities, emerging markets | -6.7 | -3.0 |
| Fixed income² | 5.8 | 2.6 |
| Alternative investments | -0.3 | -0.1 |
| Foreign exchange and treasury | 2.8 | 1.3 |
| Total | -47.7 | -21.7 |
² Currency hedged return.
Portfolio return
|
|
2008 | 2007 | 2006 | 2005 | 2004 | Annual return |
|---|---|---|---|---|---|---|
| Equities, Swedish | -40.0 | -3.8 | 24.9 | 34.4 | 26.6 | 4.2 |
| Equities, non-Swedish¹ | -39.9 | 3.8 | 13.7 | 14.3 | 12.1 | -1.9 |
| Equities, emerging markets | -41.5 | 30.6 | 12.5 | 62.5 | 15.8 | 10.1 |
| Total equities | -40.1 | 4.7 | 16.1 | 22.1 | 15.5 | 0.5 |
| Fixed income¹ | 8.3 | 4.2 | 1.3 | 4.0 | 6.9 | 4.9 |
| Total listed assets | -22.4 | 4.4 | 9.2 | 17.0 | 11.4 | 2.9 |
| Alternative investments | -3.5 | 18.6 | 38.4 | 47.6 | 13.2 | 21.5 |
| Total return | -21.7 | 4.8 | 9.8 | 17.5 | 11.4 | 3.4 |
SEK return by asset class, 2008
¹ Currency hedged return with the exception of equities
in emerging markets, where return is reported without
hedging due to a lack of hedge opportunities.
Total return 2004–2008
Annualized return by asset class 2004–2008
Net assets, net inflow and investment income since 2001
