Swedish pension fund AP7 returned 17.7 per cent on its investments in the first six months of 2023, its half-year report has revealed.

The majority of AP7 participants are in the pre-selection AP7 Såfa, which consists of the funds AP7 Aktiefond and AP7 Räntefond.

AP7 Aktiefond, which invests in equities, returned 19.6 per cent in the first half of the year, which AP7 primarily attributed to the recovery of US technology companies after being under pressure in 2022.

Meanwhile, AP7 Räntefond, which invests in fixed-income securities listed in Swedish kronor with a relatively low duration, returned 0.5 per cent.

The pension fund noted that, in the fixed income market, many fixed income funds had been pressured by interest rates continuing to rise during the first half of the year.

AP7 Räntefond’s 0.5 per cent return was supported by the rate of return, which is the return from the holdings if interest rates are stable, amounting to approximately 4 per cent.

The share of green bonds in the fund increased from just over 10 per cent to around 19 per cent in the first half of 2023.

The average annual return for AP7 over the past 10 years was 15 per cent, while the average annual return since AP7 Såfa was started in 2010 was 13.8 per cent.

The fund assets for AP7 Aktiefond amounted to SEK 977.5bn at the end of the year, while for AP7 Räntefond assets totalled to SEK 91bn.

At the start of this year, AP7 received a broader mandate that made it possible to invest up to 20 per cent of AP7 Aktiefond in unlisted assets.

In the first six months of 2023, a first “major investment” within the mandate was made when AP7 became a partner in AMF Fastigheter's Urban Escape neighbourhood in central Stockholm.

“I look forward to being involved in developing our strategy against the background of the new and broader mission that the fund has been given,” said AP7 CEO, Pål Bergström.

“At the same time, it is important to stick to what has guided the fund's success historically. I then think of our savings focus combined with the importance of diversification and long-termism and active and forward-looking sustainability work.”

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