The strategy of diversifying investments went unrewarded for Finnish pensions insurer Veritas in the first nine months of this year, according to its chief investment officer, due to a range of factors triggered by the coronavirus pandemic.
The smallest of the four pension insurance companies in Finland’s earning-related pension system reported a 3.3% investment return between July and September, but said in its interim report that for the year so far, its overall return was still negative at -1.1%.
Kari Vatanen, Veritas CIO, said: “This year, the diversification of investments has not paid off.”
The €3.6bn pension fund’s investment chief said risks in different asset classes had been realised at the same time in the reporting period, with only a few industries that had suffered minimally as a result of the pandemic generating positive investment returns.
“On the whole, the effect of diversification has decreased due to the growing central bank stimulus,” Vatanan said in the report released today.
He described Finland’s financial recovery from the pandemic as taking on a “K-shape” with some industries strengthening, and others still struggling. “Although the manufacturing industry has begun to bounce back, the service sector continues to suffer,” he said.
Veritas reported a rise in total assets to €3.6bn from €3.5bn at this year’s halfway point, with its 3.3% Q3 investment return comparing to a 4.2% loss for the first half of 2020, and a positive 9.9% result for the whole of 2019.
Of the asset classes in its portfolio, the Turku-headquartered firm said real estate performed the best in the first nine months of 2020, generating a 3.5% return, fixed income investments returned 1.2%, and equities saw a 3.5% loss. Veritas’ “other investments” category – mainly comprising hedge funds – resulted in a 5.1% loss.
Veritas’ solvency ratio stood at 124.3% at the end of September, up from 122.4% at the end of June, according to the report.