Första AP-fonden Annual Report 2018: Exceeding the long-term goal

Första AP-fonden’s (AP1’s) net investment income for 2018 as a whole amounted to SEK -2,074 million (29,349) after expenses. This equals a return of -0.7 per cent (9.6). Total net assets amounted to SEK 324 billion at the year-end. The average annual real return after expenses for the past ten-year period is 7.4 per cent, which is higher than the target of 4.0 per cent.

CEO Johan Magnusson comments on the results:

“We are exceeding our long-term goal by a good margin. For the individual year 2018 the result was in line with our expectations. Real estate and private equity funds developed positively. Equities generally performed poorly, including on emerging markets and in our quantitative portfolio management.

“For several years now we have been saying that the extremely favourable returns on the financial markets are not sustainable in the long term. We can now see signs that conditions are changing, and we therefore anticipate a growing challenge in terms of achieving our real return target of four per cent.

“Alongside the other AP Funds, during 2018 we have been preparing for the new regulations which came into force on 1 January 2019. We have worked together to formulate a joint approach to core values, guidelines for sustainability reporting, and which assets the funds should avoid investing in. We have also excluded investments in some 100 companies that produce tobacco, nuclear weapons, thermal coal and oil sands.

2018 in brief

  • Net investment income after expenses for 2018 was SEK -2,074 million (29,349). This equals a return of -0.7 per cent (9.6).
  • The average annual real return after expenses for the past ten-year period is 7.4 per cent, which is higher than the target of 4.0 per cent.
  • Despite declining markets management generated an excess return of SEK 5.5 billion (3.5) above the Fund’s comparison index, which equates to 1.7 per cent. The main contributions in absolute terms came from real estate and private equity funds.
  • AP1’s total portfolio value on 31 December 2018 was SEK 324 billion.
  • Since 2009 AP1 has disbursed SEK 51 billion, of which SEK 6.8 billion in 2018, to cover the contribution deficit in the income pension system.
  • The Fund’s administrative expenses totalled SEK 451 million (445), equalling 0.14 per cent (0.15) of average assets under management.
  • During the ten-year period 2009–2018, the Fund’s return exceeded the income index by 5.9 per cent a year on average.
  • The risk level in the portfolio was reduced in line with market developments.
  • A decision was made to stop investing in companies that produce tobacco, nuclear weapons, thermal coal and oil sands.

Download AP1’s 2018 Annual Report here.

Contacts

Johan Magnusson,
CEO

Ossian Ekdahl,
Chief Active Ownership Officer, Acting Head of Communications
+46 709-681 209
ossian.ekdahl@ap1.se