AP4, Stockholm, reported a 9.1% return for the year ended Dec. 31, with assets growing 6.8% to 356.6 billion Swedish kronor ($43.4 billion).
That equates to a 30.1 billion kronor gain. In 2016, the fund returned 10%, or 30.5 billion kronor.
Over the past decade the fund has generated an average annualized return of 7.3%, and 6.1% since its inception in 2001. AP4 has a long-term return target of 4.5%. The fund, which is one of five buffer funds in the Swedish pension system, paid out 7.4 billion kronor in 2017 to the national system, compared with 6.6 billion kronor in 2016.
Equities, which made up 58.1% of the portfolio as of Dec. 31, returned 15.7% in 2017, compared with 8.9% in 2016. That allocation consisted of 40% global equities, which returned 19.3% in 2017 vs. 7.3% a year earlier; and 18.1% Swedish equities, which gained 8.4% in 2017 vs. 12.4% in 2016. The report added that AP4's mission to "create long-term high real return justifies a high share" of equities.
Fixed-income exposures of 31.4% returned zero in 2017, compared with 2% in 2016. The fund's 8.1% real estate allocation gained 18.7% vs. 25.9% in 2016; and the alternatives allocation, at 2.3%, returned 10.9% in 2017 vs. 3.4% in 2016.
The annual report said currency exposures lost 1.1%, vs. a 2.3% gain in 2016; and other exposures, at 0.1% of the portfolio, lost 0.2%, steady vs. the 2016 return.
The majority of assets continued to be internally managed, at 83% in 2017, up from 77% in 2016. Further details could not be learned by press time. Executives could not be reached for comment by press time.
