Sweden's AP7 had a "fantastic" 2024, according to its CEO, Pål Bergström, as returns averaged 27.3 per cent.

The AP7 Equity Fund, with higher risk, returned 29.8 per cent – equivalent to SEK 295bn.

The safer AP7 Fixed Income Fund returned 3.1 per cent.

Bergström credited the improved returns to strong stock markets and the weakening value of the krona.

"Holding a lot of investments in foreign currency has contributed heavily to our success," he added.

However, Bergström and Lena Fahlén, AP7 head of asset management, noted that it was a year characterised by a deteriorating security situation and escalating forces that counteracted climate change progress.

"Geopolitically, it was a very messy and uncertain year that somewhat obscures the view when we look at the whole picture," Fahlén said.

"Yes, it's easy to think this has been a fantastic year. But it's a little hard not to think about how the world has changed for the worse during the year. There are more clouds of worry geopolitically and security-wise," Bergström added.

Looking ahead to 2025, Fahlén highlighted two focus areas: "In our fixed income fund, we will expand the investment universe further. We can now invest in bonds issued in euros and dollars, of course, hedged to the Swedish kronor. But we are also working on investing in corporate bonds.

"In our equity fund, we are implementing an internally managed transition mandate where we focus on financial returns and driving climate change. Then, in parallel, we continue to build our alternative portfolio with real estate and private equity."

Bergström emphasised the need for a long-term perspective on these changes.

"It will be exciting work, and I think it will take time. It must take time. This is a large amount of managed capital. We have one, and it should be done so that everyone can feel safe; everyone who works here and all our savers should feel safe in this transition. But over time, I think that is the path we have to take."

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