Finnish pension mutual Etera has seen a rebound in its investment performance this year after moving to a more dynamic asset allocation policy.
The fund, which saw assets under management fall in 2013, made a 3.4% return from January to June, mainly through better returns from assets that failed the fund last year.
Assets increased in value, hitting €5.7bn at the end of June, almost €200m higher than at the same point in 2013.
CIO Jari Puhakka told IPE the 3.4% return was split evenly across the two quarters, and that he was pleased with the consistency of the return after the poor returns seen previously.
Its quoted shares returned 9.6%, compared with -5.7% in 2013, and its equity investments returned 6.9%.
The fund’s real estate holdings returned 2.1%, an asset class Puhakka said was going to be a part of future diversification away from bonds and equities, while still maintaining an appropriate solvency ratio.
“It is difficult to find areas where you get returns [appropriate to maintain solvency requirements],” he said.
“We own land for a fund for which we receive payments from the builders. It is a good example of a risk/return profile.
“There is a good motivation for regular payments from the residents, and it is inflation-linked. We have been concentrating on finding these other areas of return other than listed equity.”
Puhakka was positive about the fund’s performance after it only provided 0.3% over 2013, with significant losses in emerging market debt and equity strategies.
At the time, Puhakka cited the lack of significant change in the economic market, which meant the investment team could not take advantage of tactical investments.
In response, the team changed its strategy to focus more on the optimisation of asset allocation strategies, rather than tactical investments.
After the successful first half of 2014, the fund’s solvency ratio hit 16.6%, up from 15.2% at the end of 2013, but still lower than the 21.3% of December 2012.
Etera chief executive Stefan Björkman said the fund now wanted to be more transparent with policy holders about investment returns.
The fund will now publish monthly updates on returns and how the investment team is allocating to assets.