The First Swedish National Pension Fund (AP1) made a 9.9 per cent return in 2024, attributing the strong performance to its “stable execution” and US stock market records.

Publishing its full-year results, net investment income amounted to SEK 44.6bn, corresponding to a return of 9.9 per cent before expenses. Assets under management amounted to SEK 496.9bn as of 31 December 2024 and the fund transferred SEK 2bn to the income pension system.

Over the past 10-year period, AP1 has made an average real return of 4.4 per cent, exceeding its 3 per cent target.

The fund said positive earnings contributions were mainly generated from the equity portfolio, with excellent returns from foreign equities, while returns from unlisted assets contributed negatively. In addition, its efforts to promote cost efficiency further reduced the expense ratio to 0.05 per cent.

AP1 CEO, Kristin Magnusson Bernard, said: “The most prominent market theme of the year for listed assets was the strong performance in the US stock market. US financial assets benefited from many factors such as strong household balance sheets, a dynamic labour market, interest rate cuts, extensive fiscal stimuli and a clear outcome in the presidential election.”

On the other hand, Swedish and European stock markets had a weaker second half after a strong start.

“Weaker economic development in Europe, together with expectations of increased trade barriers and geopolitical influence, were identified as the main drivers. We, therefore, increased our exposure to US small and large caps, reduced our exposure to Europe outside Sweden, and dynamically adjusted our currency positions and duration in fixed-income assets,” she said.

Furthermore, Magnusson Bernard commented on AP1’s sustainability work, in which it acted through nomination committees, voted at all general meetings and engaged in individual dialogues with companies to “create the best possible conditions for them”.

“We recognise that a profitable and sustainable climate transition remains a high priority in the business community, even if the transition rarely is simple nor follows a straight line. It is therefore important for us to responsibly support the companies we own towards a more sustainable development, at a pace that balances what the circumstances enable and what our future requires,” she said.

The positive year follows recent news that AP1 is to be consolidated into AP3 and AP4, following the conclusion of a government review that was announced in October 2023. The aim is to modernise and improve the efficiency of the AP funds’ management. The legislative changes are proposed to enter into force on 1 January 2026.

“We continue to pursue high returns in a sustainable and trust-building manner in an increasingly complex world where systemic risks are becoming more important. Transparency, clear frameworks and accountability are key to support execution power, returns and trust among all stakeholders,” Magnusson Bernard concluded.

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