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AP1 returns 9.3% in 2016 on real estate, forex strength

AP1, Stockholm, returned 9.3% in 2016, bolstering assets by 7% to 311 billion Swedish kronor ($34 billion).

The return is equal to 27 billion kronor and compares to a 4% return for 2015, said a financial update of the pension fund’s 2016 results.

The pension fund, one of five buffer funds in Sweden, paid 6.6 billion kronor into the national pension system in 2016. In 2015, it paid 4.9 billion kronor into the national system.

As of June 30, AP1’s allocation was 33% equities, 27% fixed income and 40% alternatives, including real estate, private equity, hedge funds and infrastructure, according to the latest published financial update for the first half 2016. The annual report will be published in April.

“The main contributions came from real estate as well as from allocation and foreign exchange,” said Johan Magnusson, CEO, said in a statement accompanying the results. “The strong results were achieved during a year characterized by turbulence in global politics and eventful financial markets.”

Mr. Magnusson added that AP1 executives “face a challenge in maintaining the good development and reaching the target of a real return of 4% on a rolling 10-year basis. This is due to several factors, such as the many uncertain market factors around the world as well as our relatively high percentage of fixed-income assets, which are governed by the investment rules that apply to AP funds.”

A spokeswoman for the fund could not be reached for comment by press time.