AP3, Stockholm, Sweden, returned a net 5.4% for the six months ended June 30, with assets at the pension fund growing 4.3% to 338.2 billion Swedish kronor ($39.7 billion).
Assets grew 11.3% for the year ended June 30.
An update Wednesday said the return equated to a 17.5 billion kronor gain. That compares to a 1.4% return for the half-year ended June 30, 2016, which equated to a 4.2 billion kronor gain. Comparative figures for the six months ended Dec. 31 were not available.
The pension fund's annual average return in the past five years was 11.1%, and was an annualized 5.6% for the 10 years ended June 30.
The update said the pension fund's equities and inflation risk categories made the largest contributions to performance. A spokeswoman for AP3 said specific returns for risk categories are not disclosed in the half-year update.
The pension fund's asset allocation as of June 30 was 31% overseas equities, 17% overseas fixed income, 16% real estate and infrastructure, 13% Swedish equities, 13% Swedish fixed income, 5% overseas index-linked bonds, 3% private equity, 1% Swedish index-linked bonds and 1% in other assets.
The pension fund continued to expand its green bond holdings, which are worth close to 11 billion kronor. The exposure was 9.5 billion kronor as of December 31. In the spring, AP3 also became a lead investor in a new type of catastrophe bond, issued by the World Bank to combat pandemics in the poorest countries in the world.
"Our net result of 17.5 billion kronor for the first six months of the year was a strong performance, driven primarily by returns on equities and our Swedish real estate holdings," said Kerstin Hessius, AP3 CEO, in the update. "We continued to build our investments in green bonds, which now account for 13% of the fixed-income portfolio."
Proposals are currently open to consultation on amending the investment rules of the 322.9 billion kronor AP1, Stockholm; 336.3 billion kronor AP2, Gothenburg; 348 billion kronor AP4, Stockholm; and AP3. The changes, which would allow the pension funds to invest up to 40% in illiquid assets and see the minimum requirement for fixed-income allocation reduced to 20% from 30%, are set to go into effect July 1, 2018.
"We welcome the proposed changes, which will improve our ability to generate positive returns. We are now analyzing the proposals and will submit our response in October," Ms. Hessius added.