Finland’s public sector pensions giant Keva has reported an investment loss of 6.4% for the first three quarters of 2022, with its investment chief saying capital markets are having to accept a new reality where central banks do not always wade in to improve tricky conditions.
Ari Huotari, chief investment officer of the Helsinki-based pension fund – Finland’s largest – said in a results statement that the brief phase of expectations in the market this summer that central banks would be lenient in terms of policy and interest rate hikes had ultimately evaporated at speed.
”It now looks very much like the central banks want to demonstrate their independence on the one hand and on the other their reluctance always to be ready to rescue the capital markets when the going gets tough,” he said.
“The capital markets now have to learn a new set up for the future,” he said.
Keva’s nine-month return figure is about midway between the returns posted by the second and third-largest earnings-related pension providers, Varma and Ilmarinen, which manage private-sector pensions.
Keva made a 10.2% loss on its fixed income investments, which make up 31.6% of the portfolio, and suffered a 14.0% loss on its listed equities, which account for another 30% of total assets, according to the interim figures released on Thursday.
However, private equity, with a 19.5% allocation in the portfolio, generated a positive 8.1% return for Keva, and hedge funds, with a 7.8% allocation, generated a 10.9% return, the pension fund reported.
Real estate investments made a positive 5.7% return in the nine-month period, with this asset class accounting for 7.6% of all Keva’s investments, it said.
Jaakko Kiander, Keva’s chief executive officer, said the dissipation of the summer optimism during September had been reflected in the fund’s negative performance.
On the other hand, Keva’s long-term financing outlook remained stable, he said.
Keva’s total investments declined in value by September to €62.2bn, it revealed. At the end of December 2021, the pension fund’s assets were reported at €66.8bn.