Equities boost returns at Finland's VER, Fennia
FINLAND – Double-digit returns from listed equities boosted results for two of Finland’s pension funds well above comparative results for the first nine months of 2011, according to latest figures.
Publishing returns for the nine months to September, both Pension Fennia and the State Pension Fund (VER) saw returns to date rise to 7.3% and 8.9%, respectively, up from losses of over 3% and nearly 6% this time last year.
Fennia in particular saw its fortunes recover, after listed equity returned 12.8%, up from -21.4% over the same period last year.
VER confirmed the asset class was its strongest performer, with returns of 13.1%.
In a statement, VER noted that, despite the “very good” returns, global equity markets remained volatile.
However, it added: “The actions to calm the financial market taken by central banks and countries seem to have worked, at least for the time being.”
In contrast to Fennia’s property investments returning 5.2%, the €15bn VER lamented that its real estate holdings had had a negative impact on its alternative portfolio.
“The uncertainty that continued in the market and the focus of investment costs to the beginning phases of funds has depleted the real estate fund investment returns during the year,” it said, noting that private equity nonetheless performed well, resulting in the portfolio returning 1.9%, a 4.2-percentage-point decline over September 2011.
Fennia also saw its fixed income portfolio slightly outperform that of the state fund, investing 55% of assets in bonds with the goal of partially funding the country’s future pension liabilities.
Where the private company achieved returns of 8.4%, VER managed 7%.
Over the past decade, the buffer fund has achieved an average return of 6%, down to 2.7% over the last five years.
Both funds’ returns compared favourably with those of local authority fund Keva, reporting returns of 10.2%, helped by listed equity returns of 14%.