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Ilmarinen’s year-to-date return turns positive after Q3 equities gains

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Investment returns at Finnish pensions insurer Ilmarinen broke into positive territory on a year-to-date basis for the first time this year at the end of September, with the €36bn pension fund generating a 2.3% return in the first nine months of the year.

Timo Ritakallio, president and chief executive, said: “The third quarter was a good one for Ilmarinen’s investment return, pushing the return from the start of the year clearly into positive figures.”

A key factor behind the improvement in investment returns was the positive development in the equity markets, he said, adding that all of the main indices had performed well in the third quarter.

“The historically low interest-rate level continues to steer investors towards alternatives such as real asset classes and stocks,” he said.

The 2.3% return on investments at current value in the first nine months of this year compares with 3.1% in the same period last year.

In the third quarter alone, Ilmarinen’s investments returned 2.9%, after 0.8% in the second quarter and a loss of 1.4% in the first.

Ilmarinen’s total investments rose in value to €36.5bn at the end of September, from €35.2bn at the same point last year.

The return on fixed income was 2% from January to September, up from just 0.1% in the same period last year.

Fixed income investments shrank as a proportion of total assets, ending the quarter at 44.9% of the overall portfolio, down from 50.3% in September 2015.

Listed and non-listed equities, shares and private equity investments increased as a proportion of assets, on the other hand, rising to a 39.1% allocation from 35.7%.

In absolute figures, equities grew to €14.3bn from €12.6bn, but Ilmarinen said it reduced the amount of risk related to this asset class by €473m by using derivatives.

The return on equities was 2% overall in the nine-month period, compared with 5.5% in the same period last year, with listed equities alone making a 0.2% loss.

Property increased to make up 11.2% of Ilmarinen’s assets, having accounted for 8.8% of the whole portfolio at the end of September 2015, with indirect real estate investments contracting in allocation terms to 1.3% from 1.4%.

This asset class generated a 2.8% return in January to September, up from 4.3% in the same period last year.

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