Sweden’s Second AP Fund (AP2) has reported a 0.4 per cent return after costs in the first half of 2025, equating to SEK 1.6bn, as global market volatility and a stronger Swedish krona impacted its performance.

Fund capital stood at SEK 458bn at the end of June, broadly unchanged from the year-end position (SEK 458.9bn) but up from SEK 445.8bn a year earlier.

Net flows to the pension system were negative at SEK -2.4bn, compared to SEK -0.9bn in the same period of 2024.

The fund’s report revealed that listed equities, credit bonds, and emerging market debt contributed positively to the results, but weaker performance from real assets and the impact of currency strength offset the gains.

“The Second AP Fund has had a slight positive development during the period. Equities and credit bonds in emerging markets have performed strongly, while exposure to real assets has had a weaker development," explained AP2 CEO, Eva Halvarsson.

“The fund’s exposure to foreign currency has had a negative impact on the result, due to the strong Swedish krona," she observed.

Despite the modest half-year results, AP2’s longer-term track record remains strong.

The fund revealed a five-year annualised return of 6.3 per cent after costs and a 10-year annualised return of 5.8 per cent, with real returns over ten years at 2.8 per cent.

Halvarsson added that the fund was continuing to implement its revised management strategy, introduced in 2024, which emphasised more dynamic and proactive management.

“Through more dynamic and proactive management, we can better adapt to a changing environment, which will contribute to a good pension for today’s and tomorrow’s pensioners", she concluded.

The report also noted that work was underway with AP6 to carry out the Swedish Parliament’s decision on more efficient management of the buffer capital.

According to Halvarsson, this aims to deliver “more appropriate and cost-effective management, which will be of the greatest possible benefit to the pension system.”

Meanwhile, the half-year report revealed that AP2 voted at 1,081 company meetings in the first half of 2025, covering 85 Swedish listed firms and 996 global companies.

This represented just over 80 per cent of the value of its Swedish equity portfolio and 85 per cent of its global equity portfolio.

The fund backed most proposals from boards and nomination committees, but voted against 21 items, primarily related to incentive plans, board fees, board appointments, and shareholder motions.

AP2 said its approach was "case by case", adding that it considered peers, company stage, skills needs and historic fee trends.

The fund stated that voting remained a "key tool" for expressing its stance on governance and sustainability issues.

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