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Finland's Keva returns 12.3%, starts new administration role

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  • Finland's Keva returns 12.3%, starts new administration role

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FINLAND - The €28.8bn fund for Finish municipal workers returned 12.3% for the last year and has taken on the administration of pensions for people covered by the state pension scheme.

The result brought the five-year annualised return to 4.3% on average and the long-term average since inception to 3.9%.

For 2010, Keva had an equity quota of 44.8% and 41.1% in fixed income, of which 28% was in euro-denominated government bonds, 20% in investment-grade corporates, 14% in high yield and 11% in emerging market bonds.

The rest of the portfolio was invested in real estate (7.6%), private equity (4%), hedge funds (1.7%) and commodities (0.8%).

Commodities were among the strongest performing assets classes, with a 19% return, while equities returned 20% and private equity 17.7%. The rest of the portfolio generated approximately 7%.

Keva investment director Ari Huotari said he expected a "quite challenging" year in 2011 as equities have already had two successive good years, while it is "increasingly difficult" to generate returns from fixed-income markets.

"Indeed," he added, "the capital markets are ripe for investing in new targets."

Since January, Keva has taken on the administration of pensions for people covered by the state pension scheme in addition to pensions for municipal workers, for which it is also managing money.

The state Treasury transferred the handling of pension applications, pension decisions, rehabilitation covered by an authorised pension provider, customer service and extract service and the payment of pensions and rehabilitation benefits for persons covered by the state pensions scheme to Keva.

A spokesperson at Keva told IPE the move was made because it was "very expensive to develop new processing systems for pension matters".

The Treasury expects the transfer to save costs and speed up the service.

Assets will continue to be managed by the State Pension Fund (VER).

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