Pension funds AP3 and AP4, managing approximately EUR 100 billion in assets, have selected SimCorp as their new provider of a front-to-back SaaS service agreement. The goal is to achieve a modern and dynamic system architecture with more automated processes and a reduced number of separate systems. SimCorp's platform, combined with Axioma's risk management solutions, will allow the funds to future-proof their investment management operations. The delivery model, where the vendor delivers the financial technology Software as a Service (SaaS), will enhance operational efficiency. AP3 and AP4 are two of the buffer funds in the Swedish public pension system.
The Fourth Swedish National Pension Fund (AP4) has reported a return of 9.6% after costs for the full year 2023, with a profit of SEK 43.9 billion. The fund capital increased to SEK 499.6 billion after transferring SEK 4.8 billion net to the pension system. AP4's cost level for 2023 was 0.08% of assets under management, 37% lower than that of corresponding pension funds internationally. CEO Niklas Ekvall attributed the good return to the favorable financial markets and ongoing management work. AP4's efforts to manage climate risks in the investment portfolio have resulted in a further 11% decrease in carbon dioxide emissions in 2023. The portfolio's carbon dioxide emissions decreased by 11% compared to 2022, and AP4 has reduced emissions by a total of 65% since 2010. AP4 made new thematic sustainability investments of SEK 7.6 billion in 2023, and since 2020, these investments amount to SEK 36.8 billion. The full annual report for 2023 will be available in March.
Global equity markets rallied during the first half of 2024, while valuations of unlisted assets stabilised. A strong US economy and slowly declining inflationary pressures were the main reasons for company and investor optimism. The return for the first half of 2024 was 5.0%, with net investment income of SEK 22.7 billion and assets under management of SEK 476.2 billion. CEO Kristin Magnusson Bernard commented on the positive contributions from listed equities and the stabilisation of unlisted assets. The Swedish government's evaluation concluded that AP1's returns are higher compared to international pension funds and that their costs are substantially lower. The CEO emphasized the importance of evaluation and transparency to retain the trust of the general public and stakeholders. The expense ratio for the period was 0.06%. AP1 is one of five pension funds in the Swedish national income pension system, with assets under management of SEK 476.2 billion. They are a long-term investor and impose stringent demands in the areas of Environment, Social, and Governance.
Sweden's AP1 buffer fund, managed by CEO Kristin Magnusson Bernard, reached its highest ever assets under management (AUM) level in the first half of 2024, with a return of 5.0% and a net investment income of SEK 22.7 billion (EUR 1.94 billion), according to the fund's interim report. The fund's listed equities contributed to a positive return, while the value of its infrastructure investments dropped by 20%.
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