Elo, the first of Finland’s main occupational pension funds this year to report first quarter results, revealed hedge funds and listed equities were the main drivers behind a 3.3% return in the three-month period.
Reporting results yesterday, the Espoo-headquartered institution posted a 6.5% gain for hedge funds and 7.0% for listed equities between January and March.
Equity market returns had been supported in the first quarter by expectations of monetary policy easing and, particularly in the US, by much higher profit growth expectations for tech firms, the €30.9bn mutual pension insurance company said.
“The European, Japanese and US markets performed excellently, while the returns were more modest in China and negative in Finland,” Elo said.
Hedge funds consisted of 9.5% of Elo’s overall portfolio at the end of March, with that weighting having risen from 8.7% at last year’s close.
Among other asset classes, Elo’s bond investments and real estate made slim gains in the first quarter and just broke even, respectively, the report showed.
“Expectations of a recovery in the real estate investment market have been postponed to the end of the year,” Elo commented, adding that the risks of its property portfolio had been “effectively distributed”, and that the long-term outlook was good.
Carl Pettersson, Elo’s chief executive officer, said the pension fund was seeing a trend of increased competition in the pension sector, which also had positive aspects.
“The cost-efficiency of the entire sector has improved, competition keeps everyone vigilant and accelerates service development,” he said.
Elo is the third largest of four pension insurance companies operating on the private sector side of Finland’s earnings-related pension system.
The two biggest such institutions, Varma and Ilmarinen, are due to report first quarter results tomorrow with the smallest, Veritas, set to post its Q1 report on Monday.
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