Keva, the €37.8bn local government pension institution of Finland, is to begin searching for a new managing director this week.
The scheme’s previous managing director, Merja Ailus, resigned in November last year in the wake of a scandal focusing on her fringe benefits and personal expenses.
The scheme has since been run temporarily by its deputy managing director, acting chief executive Pekka Alanen.
Keva insures Finns working in, or having retired from, jobs at the local government, the state and the Evangelical Lutheran Church of Finland.
Laura Räty, chairwoman at Keva, noted that Keva was currently also drafting reforms that aimed to increase transparency in the scheme’s running.
“It is very important to pay attention to leadership and organisational culture at Keva,” she said.
“In all organisations, changing these requires long-term work, which at Keva has now started.
“In the future, Keva has to be more transparent, as it is vested with notable responsibility as one of the central actors in the local work pensions market.”
Keva recently also hired a new CIO for its real estate portfolio, Petri Suutarinen.
He believes that, within property investments, residential property currently is the most attractive investment target for pension investors in Finland.
Keva’s property portfolio accounted for approximately 7.3% of the scheme’s total assets at the end of 2013 and produced a return of 3.5%.
“Last year,” Suutarinen said, “nearly 40% of new properties in Finland were built for renting purposes, whilst rents in the capital region increased by 4%.
“The minor uncertainty in the domestic economy seems to be the increasing popularity of renting instead of buying.
“Furthermore, migration pressure to the capital region in Finland will continue, so it will still be reasonable to invest in residential property in future. This attracts a long-term institutional investor such as Keva.”
In 2013, Keva’s investments returned 7.5%.
According to acting chief executive Alanen, Keva’s investments performed well in light of the prevailing market environment.
“Fixed income markets in particular faced difficult times, and interest income remained low,” he said.
“The relatively positive news from the US – and to some extent from the euro-zone – brightened the outlook for the equity markets in the global economy.”
Equities performed best (16.6%), whilst private equity investments (14.4%) and hedge funds (11.8%) also produced strong returns, Keva said.
Property investments returned 3.6%, and fixed income 0.4%.
The return on commodities was negative (-3.6 per cent).