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​Keva, VER returns boosted despite ‘restless’ markets

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Keva and the Finnish State Pension Fund (VER) have seen double-digit returns on equity holdings and renewed strength in fixed income portfolios, with both schemes beating their 2013 results.

Jukka Männistö, chief executive at the local government pension provider, said Keva’s 8.7% return in 2014 was an “excellent testimony” to the work of its in-house investment team.

“The markets were very restless throughout the year and consequently showed great fluctuations,” he said. “Notwithstanding the challenging market conditions, we performed well.”

Keva outperformed VER, which said investments had returned 7.8% over the course of the last year, up from 6.4% in 2013.

Both funds cited equity as their strongest performer, with listed equity returning 11.7% at VER and 12.6% at Keva.

Timo Löyttyniemi, who was last year appointed vice-chairman of the EU Single Resolution Board for banks and will leave his current position by the end of February, noted that signs of growth were still outstanding across the global economy, despite improvements in the US.

He added that low inflation expectations had meant monetary policy remained “lax”.

“This enabled low interest rates, and, consequently, the return on fixed income investments and equities was sound despite intense fluctuations,” he said. 

Both funds also saw noticeable year-on-year improvements in returns from their fixed income holdings, with VER’s portfolio seeing performance up 6.5 percentage points, to 4.9%, over 2013.

For its part, Keva also saw fixed income return 4.9%, improving on the 0.4% return from 2013, but CIO Ari Huotari said the coming year would only see limited potential for improved returns.

Private equity was the local government fund’s strongest performer, returning 22%, with real estate returning 5.6% and a small commodities portfolio suffering a loss of 36%.

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