Stockholm-based pension funds AP3 and AP4 recorded investment returns of almost 10% each in 2020,with both noting strong performance despite exceptional market movements.
AP4, the slightly bigger of the two funds, saw assets grow 7.5% to 449.4 billion Swedish kronor ($54.9 billion) in 2020. The fund achieved a 9.6% investment return, equal to a 39.3 billion kronor gain, its annual report said. In 2019 the fund returned 21.7%, or 75.2 billion kronor.
The fund's five-year annualized return was 9.8%, vs. 9.3% as of Dec. 31, 2019. The 10-year annualized return was 9.7%, down from 9.9% the year previous.
The fund's asset allocation as of Dec. 31 was 39.6% global equities, 16.7% Swedish equities, 20% global bonds, 10.6% Swedish bonds and 13.1% real assets.
"AP4 commendably navigated the exceptionally turbulent market situation during the year," Niklas Ekvall, CEO, said in the update. Active management contributed 2.4 percentage points, or more than 10 billion kronor, to the fund, Mr. Ekvall said.
Fund executives took advantage of the fallout after the coronavirus pandemic hit markets in March, increasing investments in equities and corporate bonds "when prices of these feel indiscriminately," Mr. Ekvall added.
AP4 also continued work to cut its carbon exposure, with plans to halve its carbon footprint by 2030 and to be net-zero emissions by 2040 at the latest.
AP3 also reported its 2020 results in an update Friday. It achieved an investment return of 9.7% in 2020, equal to a 37.2 billion kronor gain, vs. a 17.6% return — a 59.5 billion kronor gain — in 2019.
Assets grew 7.4% for the year to 423 billion kronor.
The annualized five-year return was 9.1%, up from 8.5% a year ago. The annualized 10-year return was 8.7% as of Dec. 31, unchanged from the year before.
The investment portfolio was invested 45.6% in equities, 31% in bonds and the remainder in alternatives.
"2020 was a year that brought many challenges and AP3's extensive experience and expertise proved immensely valuable in tackling them," Kerstin Hessius, CEO, said in the update. "The difficult and uncertain conditions created by the pandemic made responsible ownership more important than ever," she added.
Fund executives voted at more than 1,000 portfolio company meetings, including at the annual general meetings of more than 70 Swedish listed firms. "We engaged with companies through dialogue and participated in share issues. We also developed the investment portfolio in the direction to reach our 2025 climate goals," Ms. Hessius said.
