Finland’s VER goes hedge fund shopping with €2bn
The money will be part of the cash needed to hike the fund's alternative asset allocation from currently 4% to the 10% strategic benchmark. "We are planning to invest in real estate (via funds), private equity and absolute return strategies," Timo Löyttyniemi, managing director of VER, told IPE.
He confirmed that absolute return strategies "would consist of hedge funds and total return type of funds". Löyttyniemi said that the fund might change its current focus on funds of hedge funds to look at direct hedge fund investment. For the total return type category the fund will be looking at very diversified funds without benchmark.
"We have now invested roughly €160m in six fund of funds and one single fund [about 1.9% of the portfolio]. At the end of this year we are targeting a 2% level of our investments in absolute returns strategies."
All new mandates created in this process over the next years will be outsourced, Löyttyniemi said. "Some of the investments will be direct funds and some funds of funds."
All state employers' and employee's pension payments are paid to VER. In 2005 that was €1.5bn. Parliament can decide to make additional payments to the fund. In recent years government had made cash contributions of around €300m to €400m annually.