Finnish pensions insurance company Veritas has rolled back the equities weighting in its portfolio in response to high valuations.
The company reported a 4.2% return on investments between January and June in its interim results, up from 0.9% in the same period last year. Equities performed the best out of all asset classes with an 8.3% return.
Niina Bergring, Veritas CIO, said: “Shares are now valued at a relatively high level, and we should adjust our long-term return expectations accordingly.
“We have therefore had a cautious line in our allocation to risky assets and have recently reduced the equity weighting.”
She said that even with a secure portfolio profile, Veritas had managed to achieve a good return in the first half.
Fixed income investments returned 2%, and private equity investments generated 11.3%.
Total investments rose to €3.1bn at the end June from €2.9bn at the end of December 2016.
Elo nets 4.4% return
Meanwhile, the larger pensions insurer Elo announced a 4.4% return on its investments in the second half, up from 1% in the same period last year.
Net pensions assets increased to €22.8bn by the end of June, from €21.8bn at the end of December.
Elo’s CIO Hanna Hiidenpalo, said: “The global investment market, especially the equity market, has yielded extremely good returns since March 2009. This has been the second-longest streak of good returns from investments since World War II.”
In the reporting period, the US dollar weakened by almost 10% against the euro in the currency market, but “the share of Elo’s open currency risk of investments was kept at a moderate level”, Hiidenpalo said.
Listed equities produced a return of 8.9% between January and June, Elo reported. Real estate generated 3.1%, but fixed income investments registered a loss of 1%.
Elo said the new partial early old-age pension, which was introduced in Finland at the beginning of this year, had proved particularly popular. In the first six months since it was brought in, Elo said it had issued the new pension to to 1,536 customers.
VER positive after strong equity, infrastructure gains
Finland’s State Pension Fund (VER) reported a 3.7% return on investments in the first half.
Of its main asset classes, VER said listed equities gave a return of 6.9% and liquid fixed-income instruments generated 1.2%.
VER said listed companies data had improved in the first six months of this year relative to 2016, and future prospects were felt to be quite bright.
Real estate funds returned 0.4% and infrastructure investments yielded 6.6%, VER reported.
At the end of June, fixed income instruments accounted for 43.7% of the pension fund’s portfolio, equities made up 44%, and other investments amounted to 9.5%.
VER’s assets totalled €19.2bn at the end of June, up from €18.8bn at the end of December.
The pension fund transferred €914m to the government budget in the first half – more than the €719m it received in pension contributions.
“This gap between income and budget transfers will continue to grow year on year and slow down the growth of the fund,” it noted in the interim report.
VER was established in 1990 to balance Finland’s state pension expenditure.
The fund said that as of the start of this year, it would concentrate more and more on long-term outcomes and future prospects instead of quarterly reporting, but would continue posting quarterly figures and commentary on them as before.