FINLAND - Investment returns for the Finnish State Pension Fund (VER) dropped to 0.0% in the first half of 2006, down from 8.6% for the same period last year.
Total assets rose to €8.3bn from €8.2bn at the end of 2005, it said in its half-year report. It stated it would pursue its aim of increasing alternative investments from 2.5% to 4% by year-end and eventually to 10% over the next few years.
"We will continue to spread assets among other instruments, with the aim of diversifying our investment portfolio", said managing director Timo Löyttyniemi.
"We are looking extensively for real estate fund products in Europe and at the same time at a few infrastructure funds in Europe", he told IPE. The value of investment commitments made for unlisted European real-estate funds in 2006 totals €125m.
In the first half fixed income, 56.7% of the portfolio, returned -2.5% (4.7% in 2005). Despite unfavourable market conditions VER made gains of 3.5% (13.4% in 2005) on equities, which make up 40.8% of the portfolio.
Alternative investments comprising real estate funds, private equity and hedge funds returned 3%.
The good returns in the equity portfolio were mostly thanks to the shares in the Nordic market which account for 35% of all equity assets and which returned 9%.
European equities overall yielded 6% while the Asian, US and Japan markets fared worst. Löyttyniemi said that at the moment the fund was "quite happy" with the balance in its portfolio and had no intention of pulling out of underperforming markets.
Other pension providers in Finland have seen returns fall recently:
- Local government pensions institution KEVA: 0.9% (6.3% in the first half of 2005)
- Ilmarinen Mutual Pension Insurance Co.: 1.4% (6.8%)
- Varma Mutual Pension Insurance Co.: 1.3% (6.7%)
- Etera Mutual Pension Insurance Co.: 0.4% (6.7%)