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Impact Investing

IPE special report May 2018


Finland's LocalTapiola, Pension Fennia see losses from fixed income

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  • Finland's LocalTapiola, Pension Fennia see losses from fixed income

FINLAND – Finland's LocalTapiola and Pension Fennia – set to merge next year to create one of the country's largest pension providers by assets – have seen comparative growth over the first six months of 2013, seeing investments return 1.6% and 1.9%, respectively, despite losses from fixed income holdings.

Fennia saw equities offer the strongest returns over the six months to the end of June, growing by 4.7% compared with the 4.4% gains from Tapiola's stock holdings.

However, Tapiola saw 0.4% losses from its fixed income holdings, nearly on par with the 0.3% losses incurred by Fennia – which also saw its hedge fund and real estate investments outperform those of Tapiola.

Fennia's direct property holdings returned 3.4% and its property funds and joint venture investments grew by 4.7%, resulting in an overall return on real estate of 3.7% for the first six months of the year.

Tapiola's property holdings, meanwhile, returned 1.7%, while its hedge fund investments returned 2.8%, only 1.3 percentage points behind the growth seen by Fennia.

Commenting on the results, LocalTapiola CIO Hanna Hiidenpalo noted that the market's reaction to changes in US monetary policy had been "strong", but she did not see the US Fed's policy shift as having damaged economic recovery.

Hiidenpalo, confirmed as CIO at Elo Mutual Pension Insurance once both providers merge next year, added: "The challenges of economic growth are widely recognised.

"Our long-term investment strategy emphasises the ability to respond to changes in market expectations."

Eeva Grannenfelt, Hiidenpalo's counterpart at Pension Fennia, said the predictability of markets would likely remain "weak" until the end of the year due to the uncertainty over central banks' commitment to stimulus measures.

At the end of June, Pension Fennia reported assets of €7.6bn, up from €7.1bn year-on-year, while LocalTapiola saw assets increase by nearly €760m to €10.2bn.

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