FINLAND – Finland’s €8.2bn State Pension Fund, Valtion Eläkerahasto or VER, is planning to allocate 10% of its assets to alternatives, according to a report.
The decision will represent a move away from its current near 60-40 bond-equity split. It has €4.8bn in fixed income and €3.4bn in equities.
“We are aiming to allocate 10% of our assets into alternatives, including unlisted real estate vehicles, private equity, as well as a little bit of hedge funds over the next four to five years, all of which is to be outsourced,” scheme managing director Timo Löyttyniemi was quoted as saying by bfinance.
Löyttyniemi added VER has already invested about 2% in alternatives and that it is steadily increasing it – “most of which will be in unlisted real estate in the future”.
The move would improve the fund’s portfolio construction and decrease its exposure to market risks.
The fund posted an overall return of 14.9% last year.
Löyttyniemi added VER was not as optimistic for equities returns in 2006 as it was in 2005. In 2005 it returned 30.8% on the asset class, which contributed to the overall 14.9% outcome.