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Sweden’s Third National Pension Fund, known as AP3, posted a 7.6% net return in the first half of 2026, with listed equities making the largest contribution as global markets rallied despite geopolitical uncertainty and concerns over heavy spending on artificial intelligence.

The return generated a net result of SEK 62.7 billion for Sweden’s income pension system, according to the fund’s interim report. AP3 managed SEK 891 billion in assets as of June 30, up from SEK 577.1 billion at the start of the year.

Much of that increase came from the consolidation of Sweden’s buffer-fund structure rather than investment gains. AP3 received SEK 255.8 billion in assets from Första AP-fonden, or AP1, following the closure of that fund at the start of 2026. Combined with investment earnings and a SEK 4.5 billion payment to the pension system, the transfer brought AP3’s fund capital to SEK 891 billion at the end of June.

Global equity markets delivered strong returns during the period, supported by solid corporate earnings, with markets “largely look[ing] beyond alarming headlines” related to the conflict in Iran, according to AP3. Concerns over significant AI-related investment and rising long-term interest rates also failed to derail the rally.

AP3’s listed-equity portfolio returned 11.5%, contributing 5.8 percentage points to the fund’s overall return.

Performance varied significantly across markets, with Japan, Taiwan and South Korea among the strongest performers, although AP3 said gains were largely driven by a limited number of companies in specialized sectors. Emerging markets accounted for 9.9% of AP3’s equity portfolio at the end of June following what the fund described as a sustained and purposeful build-up. The allocation contributed 1.7 percentage points to the fund’s overall return.

That positioning reflects an approach AP3 Chief Investment Officer Jonas Thulin discussed in a July interview with Markets Group, when he described the fund’s investment philosophy as centered on dynamic asset allocation, sector-agnostic equity management and a stock-by-stock approach to emerging markets rather than simply tracking benchmark indexes.

Thulin specifically pointed to Taiwan and South Korea as markets where AP3 was finding opportunities, including companies positioned to benefit from AI-related demand. “When we look at the earnings revisions, we look at the underlying macro fundamentals, which is clearly outperforming Europe for the time being,” he said. “We want to deploy more capital to other markets than building up more capital in Europe.”

He added that the growth of data and artificial intelligence has made markets more navigable despite increasing complexity.

“I wouldn’t have believed that the current environment would be as predictable as it is,” Thulin said. “When we have all this new data — we have AI and things have become more complex — yet, when we look at the market, this actually make the market easier and more rational.”

AP3 Chief Executive Staffan Hansén credited the fund’s investment approach for the first-half results while also highlighting the integration of AP1’s assets.

“AP3 has navigated financial markets successfully during the period, once again demonstrating the value of an active and disciplined investment strategy,” Hansén said in the interim report. “The consolidation of the buffer funds at the turn of the year proceeded smoothly, and the assets transferred from AP1 have been successfully integrated into the Fund’s investment structure.”

AP3’s asset-management cost ratio fell to 0.05% of assets under management from 0.08% at the end of 2025 as costs increased at a significantly slower pace than assets following the AP1 transfer. The fund noted that the interim cost ratio is calculated on a full-year basis.

Over longer periods, AP3 generated an annualized return of 6.7% over five years and 8.9% over 10 years through June 30. Its 10-year annualized real return was 5.8%.

The fund also underwent a board leadership transition during the period. Christina Lindenius stepped down as chair in June after nine years on the board. Magdalena Wahlqvist Alveskog has been appointed chair effective Sept. 1, with Johan Bygge serving as acting chair until then.

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