Our investments

Portfolio composition

A balanced whole

Första AP-fonden (AP1) takes a long-term, diversified approach in its asset management, whereby return potential and risk are balanced.

AP1 invests in a broad global asset portfolio consisting of equities, fixed income securities, real estate, infrastructure, private equity funds and hedge funds.

Swedish, European and American equities are managed in our internal active management, with a focus on just a few companies. We also work with external managers for small cap equities on developed markets, and on emerging markets in order to access local knowledge.

AP1 has a broad portfolio of assets in order to achieve high, long-term returns. Key real estate investments include Vasakronan, Sweden’s largest housing company, which is jointly owned by AP1, AP2, AP3 and AP4.

Photo: Vasakronan/Gustav Kaiser

Our global portfolio of fixed-income securities is founded on bonds with a high credit rating. There are, however, also more high yield bonds in the Fund’s holdings.

In addition to equities and fixed-income securities, AP1 also makes alternative investments such as real estate and infrastructure, both indirectly and through direct ownership. Our alternative investments, which are also global, include hedge funds, which balance out the risk of highly volatile equities, as well as private equity funds where investments are made in unlisted companies via external asset managers.

We are also active on the foreign exchange market.

Technically oriented equity management

There is also comprehensive, more technically oriented equity management, where we use mathematically oriented solutions to optimise investment decisions.

To achieve good returns on the pension capital we manage, we need to take market risks. Diversification is an advantage here, since it allows return opportunities while spreading the risk. Because of the Fund’s size and long-term approach, we can also take risks when other players can’t.

All of the Fund’s risks must be taken under close control and within defined limits.

Our Board of Directors makes decisions on the risk preference, expressed in an overarching division of assets into equities and fixed-income securities. The risk preference is based on the investment rules in the National Pension Insurance Funds (AP Funds) Act, and currently states that 65 per cent of the assets should be invested in equities and 35 per cent in fixed-income instruments.

The purpose of the Fund’s asset management is to achieve a better outcome than passive management according to the overarching asset allocation. Fund allocation is therefore specified in more detail by the President into a range of different assets.

To achieve good returns on the pension capital, we need to take market risks.

This asset allocation is then specified in even more detail within AP1’s organisation. There is never any doubt as to which type of investment decision may be made by each executive. There are also defined mandates for different units regarding tolerance for divergences.

Every day, our portfolio is checked against limit values in the AP Funds Act and internally set risk restrictions.

We are also influenced by operational risks which relate to processes, IT systems and human error. Financial instruments are developing and there are more and more derivatives, and this calls for sophisticated systems and procedures to minimise the operational risks.

Investment beliefs

To produce the best possible return after expenses over time, AP1’s investment operations must be characterised overall by:

  • Diversification
    Investments are distributed between different types of asset to achieve the right balance of risk.
  • Long-term approach
    A multi-year perspective makes the most of our competitive advantages.
  • Risk premiums
    Controlled risk enables a good return.
  • Ineffective markets
    Information advantages can be used on selected markets.
  • Cost efficiency
    The return level should not be burdened by inefficient cost utilisation.
  • Sustainable value creation
    The priority is on well-managed companies and other investment objects.