FINLAND - Kuntien eläkevakuutus (Keva), the local government pension institution, generated a return on its investments of 6.5% in the first half of 2009 following a continued rally from equity markets.

Figures from the pension fund showed in the six-month period the market value of the investment assets increased to €21.96bn, up from €19.96bn at the end of 2008, although this is still lower than the €22.87bn recorded at the end of June 2008.

The investment return after expenses equated to 6.5%, with equity investments returning 10%, fixed income producing 5.8% and real estate investments - including real estate funds - yielding 0.6%.

Among the fund's other investments hedge funds returned 8% and commodities around 25.2%, however private equity holdings produced a disappointing return of -7.2%.

The asset allocation at the end of June was 36.9% in equities, 48.7% in fixed income, 9.5% in property, 3.5% in private equity, 1% in hedge funds and 0.4% on commodities.

Despite the positive performance, Timo Viherkenttä, deputy chief executive of Keva, noted the market situation "remains precarious", even though the stock market and corporate bond market had risen rapidly in the first half of the year. He also noted the fund's investment returns has been "supported in particular by share prices increasing in Asia and other emerging markets".

Viherkenttä claimed even though the market rallies have continued since June - improving returns to 10% since the beginning of the year - the "global economic problems are not gone".

Further figures from Keva revealed pension premiums reached €2bn in the first half of the year, while pensions paid to 326,000 beneficiaries equated to around €1.5bn, which was 10% more than the same period in 2008.

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