Since its inception in 1996 AP6 has contributed SEK 60.3 billion to the pension assets of the Swedish public. AP6’s fund assets have grown from SEK 10.4 billion to reach SEK 70.7 billion at the end of 2023. The Fund has generated positive net earnings every year for the past decade.

Investment in unlisted assets

AP6 is part of the Swedish state pension system and all the AP funds combined are referred to as the buffer capital. AP6’s assignment is to manage funds entrusted to it in the private equity market (unlisted assets) according to the law that governs the Fund’s operations, the Sixth Swedish National Pension Fund Act (2000:193).

Long investment horizon

Since 2012 AP6 has pursued a successful investment strategy that has generated a high return for the AP fund system. The strategy, which is based on an international private equity portfolio of indirect investments in high quality funds and co-investments, has been built over many years and has developed in different stages. The transformation of the portfolio was completed in 2019 and it’s current composition reflects the long-term strategy. It thus takes a long time – often several years – to transform a strategy within private equity where the portfolio consists of privately owned, unlisted companies. Since its inception in 1996 AP6 has generated a return of SEK 60.3 billion, the majority of which was created within the framework of the current strategy.

Closed-end fund

The conditions for private equity investments are entirely different from those for asset management involving listed equities. For a private equity investor the way in which liquidity is managed is particularly important. Not meeting the commitments in a fund can be very costly and can jeopardise the entire remaining investment. This is why this class of asset is normally best suited for large and institutional investors with a long investment horizon. It is also the reason why AP6 is a so-called closed-end fund, where the legislator is aware that it is not possible to extract liquidity on an ongoing basis in the same way as from other AP funds. Requiring extensive currency hedging has a major impact on liquidity in times of volatile exchange rates as the closed-end fund structure can instead become a burden. A long-term perspective and stable conditions are essential for investment in unlisted assets.

Sustainability

AP6 has a long-term focus and a systematic approach to responsible investment and integration of sustainability into all parts of its investment activities. According to the Sixth Swedish National Pension Fund Act (2000:193), AP6 is to manage fund assets in an exemplary manner through responsible investment and ownership. Integrating sustainability helps to identify risks as well as opportunities in investment activities and is therefore essential in order to generate a long-term, high return. Paying attention to sustainability factors is also essential in order to maintain public trust in AP6 as an asset owner in the national pension system. AP6 bases its efforts on the international frameworks and agreements that define sustainability and that are expressed in the Swedish Government’s core values regarding human rights, democracy and sustainabl development. The work is characterised by clear processes to integrate sustainability in the investment and ownership phases, by setting standards, evaluating, monitoring and through dialogue.