Sweden’s Första AP-fonden (AP1) has reported a return of -9.4 per cent, after costs, in the first half of 2022.

Publishing its interim results, the buffer fund said that it continued to deliver positive results from currency and unlisted assets as well as risk capital, real estate and infrastructure, but it has been difficult to parry the negative development for listed shares and bonds.

A total of SEK 2bn has been transferred to the income pension system, and at the end of the year the fund had a managed capital of SEK 420bn.

Commenting, AP1 CEO, Kristin Magnusson Bernard, said: "With Russia's invasion of Ukraine, war is being fought in our immediate area and Europe is dealing with its biggest refugee crisis since World War II. In the negative market situation, our focus was on protecting the portfolio by reducing equity weighting, reducing interest rate sensitivity, optimising our liquidity management and taking advantage of the strong US dollar.

“However, with a portfolio where the majority of the capital is invested in listed assets, Första AP-fonden cannot, in the short term, parry market falls of the magnitude that occurred in the past six months. In a very challenging market, we have successfully managed to protect the portfolio and report a return of minus 9.4 percent in the first half of 2022 when the Stockholm Stock Exchange is down minus 30 per cent (OMXSPI) and global indexes (MSCI World) have gone down 20 per cent during the same period.”

Magnusson Bernard added that the fund constantly challenges itself to learn from past periods of market turbulence and question historical patterns in order to act in a way that creates value.

“In crisis situations, the necessary handling of urgent issues here and now can lead to losing focus on long-term issues or to short-term decisions even exacerbating structural challenges. The war in Ukraine and the market turmoil worldwide have also raised fears among many that, for example, efforts to reach the climate goals will decrease. Much points, however, to the outcome being the opposite in that the war exposed vulnerabilities both in the form of energy dependence and energy security as well as the social and environmental balances a faster phasing out of fossil fuels entails,” he said.

Share Story: