Rapid economic rebound and high market activity enabled a strong financial result

The first half of 2021 was characterised by high global capital market activity backed by a rapid economic rebound and strong risk appetite. Första AP-fonden’s (AP1) financial return for the first half of 2021 was 11.0 per cent before expenses and 10.9 per cent after expenses. A total of SEK 4.2 billion was transferred to the income pension system and at the end of June 2021 the Fund had assets under management of SEK 431.5 billion.

CEO Kristin Magnusson Bernard comments on the results:

“As a long-term investor with a strong balance sheet, AP1 has good capacity to bear risk effectively. The Fund’s constructive view of risk-taking was well rewarded financially during the first six months of the year. We have been well positioned to benefit from the prevailing market situation, and most asset classes in the portfolio contributed positively. Our considerable exposure to global and Swedish equities, where especially the latter have shown outstanding performance year-to-date, was the main return driver, although real estate and other alternative investments also contributed positively.

Sustainability and especially “green” investments continue to be a dominant market theme, and AP1 is fully focused on utilising this trend to fulfil its objectives. During spring 2021 AP1 invested in Northvolt jointly with AP2, AP3 and AP4, for a total of USD 400 million. The Northvolt investment is a good example of how we as a long-term investor can invest in companies who might serve as a transformative and profitable force in the global climate transition and thus contribute positively both to the Swedish income pension system and to society at large.

While risk-taking has been rewarded financially during the spring, the overall upwards market direction has not been without its hiccups. A key tug-of-war originated in diverging views of future inflation developments, especially in the U.S. Where some investors see major risks for overheating from huge monetary and fiscal stimulus measures, others consider those issues negligible and expect instead that low-for-long interest rates will enable of large-scale investments, increased employment and value creation. Valuations in certain market segments have at times seemed potentially exaggerated, but over time market and valuation froth has subsided in a controlled manner. At AP1 we look forward to an exciting remainder of the year, where we aim to respond nimbly to changes in market direction while being firmly focused on our long-term mission: to create high returns through exemplary asset management, at low cost.”

Key ratios 30 Jun 2021 30 Jun 2021 31 Dec 2020
Closing net assets, SEK bn 431.5 355.0 392.6
Net investment income for the period, SEK bn 43.1 -6.6 34.8
Net flow to the pension system, SEK bn -4.2 -4.2 -7.9
Opening net assets, SEK bn 392.6 365.8 365.8
Expense ratio, operating expenses, %* 0.06 0.06 0.06
Expense ratio, commission expenses, %* 0.02 0.03 0.02
Total expense ratio, %* 0.08 0.09 0.08
Return after expenses, % 10.9 -1.8 9.7
Real return after expenses, % 10.4 -1.0 7.0
Annualised return after expenses, 5 years, % 9.9 5.8 8.4
Annualised return after expenses, 10 years, %** 9.0 7.8 8.0
Real annualised return after expenses, 10 years, %** 8.0 6.7 7.0

* In the six-month interim report, the expense ratio is calculated as the full-year effect.
** Also in six-month interim reports, the annualised return is calculated for 10 and 5 years respectively.

AP1’s Interim report 2021 can be found here (in English).

For more information, please contact:

Kristin Magnusson Bernard
Phone +46 (0)8-566 202 00

Sara Christensen
Head of Communications AP1
Phone +46 (0)70-968 12 50