AP4, Stockholm, recorded a 3.8% return for the six months ended June 30, bolstering assets to 366.9 billion Swedish kronor ($40.9 billion).
In an update, the fund said the return equated to 13.7 billion kronor. For the six months ended June 30, 2017, the fund returned 5.2%; comparative figures for the six months ended Dec. 31 were not available.
Assets grew 2.9% vs. from year-end and by 5.6% vs. June 30, 2017.
AP4 achieved a five-year annualized return of 11%, and 8.7% for the 10 years.
The fund's 40.4% global equities allocation returned 0.7%, while Swedish equities, which made up 15.9% of the allocation, returned 9.1%.
On the fixed-income side, the 21.4% global interest rates allocation lost 0.9% for the six-month period, but the 12.3% allocation to Swedish interest rates gained 1.4%. Real assets achieved a 6.2%, with a 10.1% allocation, and "other" allocations of -0.2% lost 0.1%. Further details were not available.
"The stable performance of the world's stock markets in 2017 has given way to higher volatility and flatter performance during the start of 2018," said Niklas Ekvall, CEO at AP4, in a report of the update. "Granted, the economy continues to be strong across a broad base both in Sweden and internationally, however, during the spring we have seen a higher risk premium in the financial markets."
Mr. Ekvall outlined a number of explanations for the "relatively tentative sentiment in the markets," including the later stage of the economic cycle and political concerns such as the U.S.' "increasingly protectionist stance."
Fears over financial markets in Turkey and Argentina also were highlighted as fueling "periodic volatility in the markets," while the Central Bank of Sweden's continued "expansive monetary policy paired with concerns over the Swedish housing market" also took its toll.
Mr. Ekvall added he is "satisfied with (the return) given the prevailing macro and market environments."
In June the Swedish government proposed changes to the rules around the four large AP funds, starting Jan. 1. Changes include lowering the requirement that AP funds hold low-yielding liquid assets with high credit ratings to 20% of the portfolio, from 30%.
