The Second Swedish National Pension Fund (AP2) generated a return of 8.2 per cent in 2024, after costs.

Publishing its annual results, AP2, said its return equates to SEK 34.9bn and the fund capital at year-end amounted to SEK 458.9bn. Its portfolio had a Sharpe ratio of 1.0 over the past 10 years.

AP2 CEO, Eva Halvarsson, said: “We deliver a strong result for the year with a good return, where the largest contribution comes from equities in developed markets and private equity.

“Within fixed-income assets, listed and unlisted credits are key drivers to the result. As the Swedish krona has weakened during the year, currency hedging has had a negative impact on the return.”

Halvarsson also spoke about AP2’s new fund management strategy implemented in 2024, which introduced a changed decision-making structure to manage the portfolio more effectively.

“The goal is to combine long-term decisions with the ability to make dynamic shorter-term allocations. The year began with a reorganisation to support the strategy, which has already led to improved collaboration between our departments," Halvarsson said.

The Swedish government recently announced its decision to consolidate the AP funds, despite opposition from the funds themselves. As part of the government’s plans, AP2 will merge with AP6.

“We look forward to taking on the implementation and will do our best to ensure that the integration of AP6's operations into AP2 will be as good as possible for the Swedish pension system,” Halvarsson said.

Last year also saw the continuation of AP2’s sustainability work; for example, AP2 now has defined climate plans towards net zero emissions for 94 per cent of the portfolio. It has also co-developed a new model for analysing deforestation risk and developed a remediation process for the fund's investments.

---