Varma, Finland’s largest private investor and mutual pension insurance company, has appointed Risto Murto as president and chief executive.

Murto will step into his new role on 1 January 2014, replacing Matti Vuoria, who will retire.

Murto is currently the €36bn firm’s deputy chief executive and a member of the executive group, serving as the CIO.

He joined Varma in 2006.

Prior to that, from 1997 to 2005, he held the roles of managing director and director at Opstock.

Murto has also worked as head of research at Erik Selin, today called Carnegie, and as head of research at the Bank of Finland.

Sakari Tamminen, chairman of Varma’s board, said: “Murto has an extensive background and strong competence in matters concerning the international economy, as well as in managing the assets of a pension company.

“A key issue for the pension system, both now and in future, is the success of investment operations.”

The appointment is said to reflect the growing importance and appreciation in the local pension scene of investment expertise as asset volume has been increasing.

During Murto’s time as Varma’s CIO, the firm’s assets under management have grown from €24.6bn to the current €36bn.

As Murto himself pointed out, “an investment professional has not become the chief executive of a mutual insurance company in the Finnish work pensions industry before.”

According to him, at present, the most important challenge in managing the country’s largest pension portfolio is low interest rates.

“On the other hand, we are lucky, as Finnish legislation does not force us to invest in risk-free bonds, like regulations in some other countries do.” 

Over the first half of 2013, Varma’s investments returned 3.2%.

The best-performing asset class was equities, with a return of 7.1%, and hedge funds, which generated a return of 4.4%.

At present, Varma’s portfolio is invested in equities (36%), fixed income (34%), property (12%), hedge funds (13%) and other investments (5%).

“The main change in our asset allocation over the first half of 2013 was a boost in our equity exposure, from 34% to 36%,” Murto said.

“The increase took place outside Finland, although we still have a strong home bias – a 40% exposure to Finnish listed stocks.”