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.