The Fourth Swedish National Pension Fund (AP4) has reported a return of -12.6 per cent, after costs, in the first half of 2022.

At the end of June 2022, AP4's fund capital amounted to SEK 459.1bn, compared with SEK 527.6bn at the beginning of the year. The result for the first half of the year was SEK -66.6bn. During the same period, a net SEK 2bn was paid from AP4 to the pension system. The portfolio's active return during the first half of the year was -2.3 per cent.

“The first half of 2022 has also been very challenging from a historical perspective with great market turmoil, and not least sharply falling stock markets at the same time as interest rates have risen rapidly. Of course, this development has not left AP4's portfolio unaffected,” AP4 CEO, Niklas Ekvall, said.

“The return for the first half of the year is strongly negative, and amounts to -12.6 percent. In this context, however, it must be remembered that AP4 is a very long-term investor, and trying to make an evaluation of an individual half-year does not make sense. If we extend the time horizon somewhat and also include 2021, AP4's portfolio has given a positive result of SEK 19.1bn.”

Ekvall added that spring 2022 will have “an obvious place in the history books” with Russia’s invasion of Ukraine and the suffering of the Ukrainian people. On the one hand, he said we are facing macroeconomic challenges with significantly higher inflation at the same time as economic growth is slowing down, which is something we have not experienced since the 1970s.

“AP4 conducts regular analyses of which asset allocation is best suited in relation to our commitments as a buffer fund in the income pension system. These show that AP4 needs a relatively high proportion of shares in our asset allocation in order to fulfill our assignment in the best possible way in the long term. However, this means that we also need to be prepared for the fact that we can have relatively large strokes in our result from one year to another, and also have an acceptance for large negative results during individual years.

“As a buffer fund in the income pension system, however, we have a very long investment horizon, and thus also a good ability to withstand periods of large market movements. The ability to act long-term is a great asset for us during periods of difficulty, noisy and turbulent markets of the type we have experienced during the first six months of the year. In fact, in a long-term perspective, many good investments are made under difficult market conditions rather than in such a strong financial market as we saw at the end of 2021,” Ekvall concluded.

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