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IPE special report May 2018

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Equity gains offset fixed income losses at Finland's Keva

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  • Equity gains offset fixed income losses at Finland's Keva

FINLAND – Equity returns of nearly 6% at Finland's Keva were able to offset slight losses from its fixed income portfolio, according to half-yearly results published by the Finnish body responsible for local authority pensions.

In a statement, Keva said its total assets under management rose to €35.3bn at the end of June, despite a 0.6% loss on its fixed income holdings that accounted for nearly half of assets.

It added that its listed equity and equity fund holdings, around 36% of investments, returned 5.7%, resulting in a 2.3% return over the first six months of the year.

Chief executive Merja Ailus said Keva's pension expenditure of €2bn developed as expected, but noted that its estimates of contribution income were lower than the €2.5bn taken over the period.

She added: "The second quarter of the year was more challenging than the first quarter, and the second half of 2013 will be very interesting in terms of investment activities."

Keva saw a 1.9% return on its real estate investments and a return on par with equities from its private equity portfolio, which returned 5.8%.

Hedge funds returned 2.6%, slightly above overall fund performance, while commodities were the worst-performing asset by far, declining 7.5% in value.

However, commodities only accounted for 0.6% of overall assets, behind the 2.6% invested in hedge funds and the 5% stake in private equity.

Combining the €800m in investment returns and member contributions, Keva saw its assets increase by 11% year on year, despite a significantly lower investment return compared with the first six months of 2012.

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