Looking ahead during a time of transition

In the first half of 2023, global-fixed income and equity markets recovered from the sharp market downturn of the previous year. It seemed as if the world’s investors struggled to interpret risk, and between prolonged periods of slow activity, the tentative upturns grew almost unnoticeably stronger. Despite an uncertain and volatile market, Första AP-fonden contributed positively to the stability of the income pension system with a return of 6.6 per cent and reported net investment income of SEK 27.8 billion. Assets under management totalled SEK 446.4 billion at mid-year.

CEO Kristin Magnusson Bernard comments:

Once again, we exceed our target of 3 per cent real returns, with returns over a rolling ten-year period averaging 5.7 per cent. Positive earnings contributions came from listed equities and from foreign exchange, which offset the negative return from unlisted real estate. Cost levels remained low with a expense ratio of 0.06 per cent.

Rising inflation rates have been the main concern of global investors for some time now. During the spring, the rising inflation gradually subsided in many developed countries but remained well above the inflation target levels set by the world’s central banks. Market sensitivity to unexpectedly high inflation outcomes over the period was high, which is not surprising given that the central banks´ austerity measures were historically dramatic both in terms of pace and scope. Despite this, labour markets in many countries showed consistently strong performance and many financial reports exceeded analysts’ expectations.

In the hesitant, but over time positive market sentiment, we gradually increased the allocation to equity and the duration, i.e sensitivity to interest rate, returning to just above neutral levels after holding a more conservative position last year. The real estate companies we own have retained their excellent credit ratings and continuous access to capital. We have also committed to maintain our financing strategies to uphold the trust from investors.

In this current moment, there are no signs that the tragic invasion of Ukraine is coming to an end any time soon. Geopolitical tensions and energy dependencies will likely continue to affect the near-term investment climate and our world is likely to be characterised by great uncertainty, substantial market volatility and high cost of capital. Going forward, expected market returns are likely to be somewhat lower, but hopefully more sustainable, with viable business models being strengthened, and higher prices bringing about prudent management of limited resources.

Maintaining stability and creating returns in such an environment requires good governance and management. During the year, our Board initiated a review of our ten-year old governance model and risk framework. The aim is to ensure that our risk-taking framework provides us with the best conditions possible to fulfil our statutory mandate and that it is on a par with the most professional pension funds around the world.

On the brink of a new era, I very much look forward to continuing to develop Första AP-fonden together with our Board and our employees.

Key ratios 30 Jun 2023 30 Jun 2022 31 Dec 2022
Closing net assets, SEK bn 446.4 420.1 421.2
Net investment income for the period, SEK bn 27.8 -43.6 -39.9
Net flow to the pension system, SEK bn -2.6 -2.0 -4.7
Opening net assets, SEK bn 421.2 465.8 465.8
Expense ratio, Operating expenses, %* 0.06 0.06 0.05
Expense ratio, Commission expenses, %* 0.00 0.01 0.01
Total Expense ratio, %* 0.06 0.07 0.06
Return after expenses, % 6.6 -9.4 -8.6
Real return after expenses, % 5.3 -14,7 -20.9
Annualised return after expenses, 5 years, %** 7.5 7.3 6.7
Annualised return after expenses, 10 years, %** 8.4 8.7 8.1
Real annualised return after expenses, 10 years, %** 5.7 6,9 5.6

* In the six-month interim report, the expense ratio is calculated as the full-year effect.

** In the six-month interim report, the annualised return is calculated for 5 and 10 years respectively

Read the full half year report 2023 here.


Kristin Magnusson Bernard, CEO Första AP-fonden, tel. +46 (0)8-566 202 00
Sara Christensen, Head of Communication, Första AP-fonden, tel. +46 (0)70-968 12 50, sara.christensen@ap1.se.