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Finnish state fund grows by 14.9% to €8.2bn

FINLAND – The Finnish State Pension Fund (VER) achieved a 14.9% investment return over 2005 and boosted its assets by €1.3bn to €8.2bn, according to the scheme’s preliminary results.

This is a substantial increase on the 9.6% return in 2004 when investment assets stood at €6.9bn.

The scheme stated it increased its equity weighting to 40% by year-end.

“We were successful in terms of regional allocation. We had less exposure in the US, which performed less well than other regions. Our small cap funds also performed well,” said the scheme’s managing director Timo Löyttyniemi.

Löyttyniemi told IPE that the fund’s investment portfolio also includes approximately 60% in fixed income.

“We are, however, increasing our investments into other asset classes like real estate, securities and private equity in the coming years,” he said. Currently, these make up 2% of the Fund’s investment portfolio.

Löyttyniemi, called the scheme’s investment returns “excellent”.

“Both equity market and fixed income market developed favourably to pension fund investor,” he said.

“Increase in the result of the companies was strong in different market areas and the level of interest rate was low. Inflation expectations were moderate.”

Löyttyniemi stated that expectations for the year ahead are “modest and conservative”.

In the first half of 2005, Finnish Pension Alliance Tela reported that Finnish pension organisations scooped a 12.9% return on equities, while fixed income and real estate returned 3.8% and 3% respectively.

Total average returns after inflation dropped from around 6.6% to 5.8%.

However the State Pension Fund had the highest return at 7.4%, compared to Ilmarinen (6%), and Varma and Etera (5.9%).

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