Sweden’s second AP fund (AP2) returned 5.9 per cent after costs last year, its annual report has revealed.

This was equivalent to SEK 23.8bn over the year and a 12.6 percentage point improvement on 2022.

AP2 stated that the improved return was influenced by positive developments in the financial markets, especially in equities.

However, its equity return was partially offset by negative developments in all AP2’s real estate investments.

The pension fund’s annualised return over the past five and 10 years was 6.6 per cent and 6.8 per cent respectively.

After the net outflow to the pension system of SEK -4.8bn, the fund capital amounted to SEK 426bn.

AP2 managing director, Eva Halvarsson, described 2023 as an “eventful year”, as inflation and interest rates peaked in the summer before falling in the latter part of the year, which contributed to a “strong finish”.

“Internally, the year was marked by extensive work on reshaping governance and organisation in order to better handle a changing environment,” Halvarsson continued.

“We have certainly always devoted time and energy to continuously developing the business, but in 2023 we, employees and board, have really turned over all the stones.

“We have reviewed our management strategy with the goal of creating a better return in an even more dynamic and efficient way.

“In 2023, we have continued to develop responsible ownership and responsible investments. This has happened in all five priority focus areas.

“Among other things, climate plans have been defined for additional asset classes and the fund's reporting has been expanded with emissions data for more asset classes and scope 3.”

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