RiskFebruary 28, 2019

One Swedish Pension Reserve Did Well in 2018, With a Bittersweet Caveat

Thanks to unlisted assets, AP6 fund beats the market and peers, but not its record from last year.

Reported by Chris Butera

Unlike its peers, Swedish pension backup fund AP6 saw very positive returns in 2018, but those rewards are bittersweet as its chief is leaving.

The retirement reserve raked in 9.6% from its investment portfolio, increasing its assets to $3.7 billion. AP6 prides itself on its allocations to unlisted assets, and with good reason.

The space provided 16.1% returns for the year, which helped the fund average a 13.2% return over the last five years, outperforming its benchmark by 1.6 percentage points..

However, AP6 was not as effective as 2017, where it returned 12.3%, with a 20.3% harvest from unlisted assets. It has still had a superior performance than several of the other four AP funds in 2018, which watched a rough stock market wash away anticipated positivity.

Outgoing Managing Director Karl Swartling said the returns came from areas that “have the highest return in sub-segments and geographic locations,” adding that performance results were high for both direct and fund investment sections of its portfolio.

The alts-oriented fund announced Swartling’s departure days before the news. He will leave on March 1 after seven years on top, to lead an undisclosed business after the summer. Deputy Managing Director Margareta Alestig Johnson will be the acting chief until it finds a new leader.

“It has been seven eventful and very developing years. When I took office, the Board had decided on a new overall strategy,” said Swartling, alluding to its unlisted assets focus and private equity portfolio. “AP6 has very competent and professional employees that I will miss.”

From 2014 through 2017, the fund had restructured by splitting two-thirds of its portfolio between direct (39%) and fund investments (37%), spread across the consumer discretionary, industrial goods, IT/telecom, and health care sectors. The remaining 24% of AP6’s portfolio is in liquidity investments. It has completely divested from all holdings that predate this implementation.