Sjunde AP-fonden, AP7‘s recent investment in real estate marks a significant step toward building a less equity-dependent investment strategy. The new regulations, allowing AP7 to allocate up to 20% of its assets to alternative investments, have been long-awaited and will enable the fund to diversify further. The fund’s focus on reducing risk and increasing diversification has already yielded impressive returns, with the equity fund delivering a 415% return between 2010 and 2022. The ability to invest in alternative assets aligns with AP7’s sustainability ambitions, allowing for increased allocations to green real estate and infrastructure. While the implementation process is still being finalised, the fund remains committed to maintaining low costs and exploring various investment avenues gradually.
As Johan Florén, chief ESG and communication officer at the fund notes, investments in alternates can be costly but the fund is determined to keep costs low. Measuring and controlling costs on an ongoing basis is key in ensuring that the diversification benefits can be realised.