AP2, Gothenburg, Sweden, achieved a 9.1% investment return for the year ended Dec. 31, helping to bolster assets 6.6% to 345.9 billion Swedish kronor ($42.1 billion).
The pension fund's annual report said the return equated to 28.8 billion kronor. That compares to a 10.5% return, or 30.5 billion kronor, for 2016.
The pension fund's annual report, published Thursday, said the average annual return for the past five years was 9%, and 5% for the past 10 years.
Investment returns were mixed across asset classes, with equities contributing positively. Swedish equities, which make up 9.1% of the pension fund's allocation, returned 11.3% in 2017 compared with 9.1% in 2016. Developed markets equities returned 10.7% with a 22.2% allocation, compared with a 16.9% return in 2016.
Fixed income produced more mixed returns. Swedish debt, at 11.8% of the portfolio, returned 0.6%, down from a 2.2% return in 2016. Overseas government debt, at 4% of the portfolio, returned -2.3%, compared with a 8.3% return in 2016. Overseas debt was also had a negative return, at -1.7%, with a 10.4% allocation; in 2016, it gained 12.3%.
Emerging markets equities returned 20.6% in 2017 with an 11.1% allocation, compared with a return of 18.9% in 2016. Emerging markets debt, accounting for 6.1% of the portfolio, returned 3.5% in 2017, compared with 17.8% in 2016. And the pension fund's 1% allocation to green bonds returned -0.6% , compared with 5.6% in 2016.
The remaining 24.3% of the portfolio was allocated to investments that include forestry and agricultural real estate, venture capital funds, alternative risk premiums, alternative credit, Chinese government bonds and Chinese equities. It returned 9.5% in 2017, compared with 13.5% the previous year.
"Our return has continued to develop positively after another year with good results at a low cost," said Eva Halvarsson, CEO at AP2, in a statement accompanying the report. "Our costs are still low, although in 2017 we have seen an increased cost in the supply chain. Our way of managing this is to manage more (assets) internally and to continue to develop our business in a cost-effective manner. This means that in cost evaluations, we continue to be highly competitive and keep our distance to most other actors in the industry."