Two of Finland’s largest pension providers have raised concerns about the impact of the political crisis in Ukraine on its investments.

Ilmarinen, the €33bn pensions mutual insurer, returned 1.3% over the first quarter of the year, down from 2% over the corresponding period in 2013, and cited increased market uncertainty and fluctuating share prices as the reason for the lower returns.

Timo Ritakallio, the mutual’s CIO, cited the escalation of political tensions between Russia and Ukraine and uncertainty over developments in China as driving the uncertainty.

The €19bn Elo, returning 1.1% over the first quarter of the year, also said the situation in Ukraine was increasing market uncertainty.

Ritakallio noted that only 0.3% of the mutual’s investments were located in either Russia or Ukriane and that country-related risk was “already low at the start of the crisis”.

However, he expressed concerns that the problems would impact Finnish listed companies, many of which benefit from Russian tourism and trade.

“The crisis will create difficulties, especially for Finnish companies operating in Russia, as well as for companies engaged in exports to the country,” he said.

“This negative development will be reflected in the companies’ share prices and therefore also in Ilmarinen’s investment portfolio.”

Ilmarinen’s equity portfolio returned 1.5% over the first three months of the year, down from 4.1% over the first quarter of 2013.

However, fixed income and real estate returns were largely unchanged over the same period last year.

Elo’s returns mirrored those of Ilmarinen, seeing 1.1% growth from the equity portfolio overall, despite private equity returning 3.7% and unlisted equity 7.6%.

Hanna Hiidenpalo, director and CIO at Elo, said: “On the equity markets, little changed during the first quarter of the year. On the fixed income markets, long-term rates fell in both the US and Europe. Central bank reactions to the economic trend diverged on the two continents.”

For more on the Nordic pensions sector, see the upcoming May issue of IPE