Veritas CIO claims the 'crisis is over'
FINLAND - Staffan Sevon, chief investment officer at Veritas Pension Insurance, has declared the recent financial crisis "is over", after announcing the company's investments have risen 9.4% so far this year, thanks to strong Finnish equity returns.
In the first nine months of this year, three main developments contributed to this healthy result, according to Sevon.
"One of these was our focus on direct investments in Finnish listed equities, which make the lion's share of our equity holdings - 20.2% of the total portfolio," said Sevon. "With hindsight, we can now say we managed to pick the right companies for our portfolio, and it was the right time to expand our domestic equity holdings."
Another contributing factor to the particularly healthy equity returns was the listing of Aktia Bank in September, in which Veritas has notable exposure to. "Our corporate loan portfolio also expanded, and by the fourth quarter of the year will amount to nearly €40m," said Sevon.
Veritas' approach to investments was overly cautious early in 2009, but the company gradually increased its risk after the first quarter of this year.
The portfolio to date is 48.8% invested in fixed income, along with 20.2% in equities, 19.9% in property, 2.3% in loans and 8.7% in other assets.
Listed equities generated the best returns in nine months of 46.6%, followed by fixed income which returned 5.5%. Property also added a 4.6% positive return while other investments added 1.2%. The only negative returns came from private equity, which delivered a -18.6% return.
Sevon said Veritas would also have fared well without the temporary relaxation of investment regulations introduced by the Finnish government as an emergency measure in late 2008. This temporary measure allowed funds to maintain a higher risk position so they would not have to sell their holdings at the height of the financial storm.
"Our solvency level was so healthy before the crisis set in that we would not have even needed the emergency measure," he said.
On the whole, Sevon also believes the crisis to be mainly over at Finnish firms, as he added: "At corporates, the crisis is by and large over. But there are still reservations as to how the Finnish economy will do. It is still difficult for small and medium-sized enterprises to get financing as their office buildings, for most of the time, are not valuable enough to motivate banks to give them loans."
Sevon continued: "The core issue at stake now is to maintain consumer confidence. The crisis is over but demand has still to pick up, which may start affecting [conditions] sooner or later."
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