Sweden’s AP2, Gothenburg, announced a total gross return of 12.8% for 2013.
Assets under management increased 9.6% for the year ended Dec. 31 to 264.7 billion Swedish kronor ($40.8 billion).
The 12.8% return exceeded the fund’s targeted average long-term annual real return of 5%. Investments in unquoted and market-listed equities were particularly successful, according to a news release from the fund.
Alternative investments returned 13.4%, compared with 13.9% for 2012. A breakdown of asset allocation was not disclosed.
“This year’s result is the second highest recorded since the fund was established,” said Eva Halvarsson, CEO of AP2, in the news release. “The 2013 result means that we have exceeded our targeted return for the past five and 10 years by a good margin.”
“We are pleased with the results — it was a fantastic year for developed market equities and we are especially pleased that as we have diversified our portfolio quite extensively, trying to reduce the reliance on equity market returns, our diversifiers have been doing well as well,” said Tomas Franzen, chief investment strategist at AP2, in a telephone interview. “Our alternatives portfolio has done just as well as the listed portfolio.”
He said the fund has about 17% allocated to alternatives, which includes real estate, its first allocation to the Chinese qualified foreign institutional investor program and private equity. It does not include hedge funds, he said.
“Emerging markets had a rough year and we can see that in our portfolio, as we have significant allocations, but it is part of a long-term strategy,” he said.