Alternative investments deliver strong returns for AP2

Sofia Karadima
23 August 2018

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AP2, the SEK 352.4bn state-owned pension fund, generated 7.3% absolute returns from its investments in alternative asset classes including private equity for the first half of 2018.

The pension fund's entire portfolio returned 2.9%, which is 0.1% below its benchmark, excluding alternative investments and costs.

The value of AP2's alternative holdings has grown to SEK 92.4bn as of 30 June, representing 26.2% of the portfolio, above its 24% target allocation.

The alternatives portfolio comprises investments in private equity, Chinese domestic market equities, unquoted real estate, alternative risk premiums and alternative credits.

AP2 has increased its exposure to private equity over the last decade. It now represents roughly 5% of the portfolio, up from 1% in 2008.

The pension scheme has recently committed to EQT VIII. Other recent commitments include £40m to The Rise Fund. The Rise Fund is among the largest impact funds established; its investments are intended to have a positive impact on the UN's global Sustainable Development Goals.

Among the scheme's sustainability goals is to increase the number of private equity funds, within its portfolio, that produce an ESG report. Around 72% of its private equity funds had produced an ESG report in 2017, below the 75% goal, but up 5% from 2016.