Finland’s biggest pension fund Keva this morning reported no overall investment gain on its €70bn of assets in the first half of this year, while its peer Ilmarinen posted a 2.1% return, having benefited from solid gains on bonds in the six-month period.
As the first two of Finland’s main occupational pension funds reported interim results today, the municipal pensions giant Keva blamed the US dollar’s dive for a narrow overall loss of 0.2% on investments, with its assets total amounting to €70.7bn at the end of June.
Private-sector provider Ilmarinen, meanwhile, reported its total assets had increased to €64.0bn.
Jaakko Kiander, Keva’s chief executive officer, said the institution’s poor return at the beginning of the year was due to the uncertainty caused by rapid changes in US tariff policies.
“This was evident first and foremost in the devaluation of the dollar,” he said.
“Due to changes in the exchange rates, the euro-denominated returns for Keva’s investment portfolio decreased,” he said, but added that Keva’s financial situation had remained stable, with the pension funding rate staying high.
Among individual asset classes, Keva reported a 2.4% return for listed equities in the six-month period, but a 1.0% loss for fixed income assets.
Real estate registered a 0.3% loss, private equity holdings resulted in a 2.7% loss and Keva’s hedge fund investments returned -4.6% in the period, the report showed.
Ilmarinen reported a 1.5% return on its equities in the first half, while its fixed income investments produced a 2.9% gain. Real estate made a 0.4% return, with the category of other investments – mostly hedge funds – returned 4.4% in the period, according to the report.
Mikko Mursula, Ilmarinen’s deputy CEO, investments, said: “Despite the geopolitical and commercial tensions, the fixed income and equity markets mainly yielded good returns in the first half of the year, and the equity market recovered rapidly from the decline in early April.”
“Uncertainties related to the US fiscal and trade policy were very visible in the currency market, weakening the US dollar and consequently the return on dollar-denominated investments,” said Mursula, who is due to become Ilmarinen’s CEO when the current leader Jouko Pölönen leaves to become CEO of eQ.
Ilmarinen and other private-sector providers in the earnings-related pension system are gaining the freedom to increase equity allocations as part of a pensions reform in the country, while Keva already announced in 2023 that it was boosting its exposure to equities to pursue higher returns.
At the end of June, Keva had a 41.3% listed equities and equity funds weighting, compared to Ilmarinen’s 36% exposure to listed equities at the same point.
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