Public-sector pensions giant Keva – Finland’s largest pension fund – reported a 3.1% return on its investments for January to June, but said in its results statement that the market outlook was uncertain.

Jaakko Kiander, chief executive officer of the Helsinki-based institution, said: “Despite the many uncertainties in the global economy, the stock market was rising, especially in the US, which also supported Keva’s investment results at the beginning of the year.”

The 3.1% return, which brought Keva’s total assets to €63.2bn by the end of June, is about halfway between the first-half returns reported by Ilmarinen and Varma – the two similarly large occupational pension providers operating on the private-sector side of Finland’s earnings-related pension system.

Among asset classes in Keva’s portfolio, listed equities produced a 5.6% return in the six-month period, hedge funds generated 3.9%, while fixed interest assets ended the phase with a 1.6% gain, and real estate was in the red after a -0.4% loss, according to the interim report released yesterday.

Keva said the development of the economy and the investment market had been variable at the start of 2023, and that even though the worst fears of a recession had been avoided, economic growth had slowed significantly, with rising interest rates and rapid inflation.

“Inflation has clearly slowed down in the beginning of the year, especially due to lower energy prices, and it is believed that the fastest phase of monetary policy tightening is over,” the pension fund said.

“However, the outlook is uncertain, and the tightened monetary policy affects economic development with a delay,” it said.

Ari Huotari, Keva’s chief investment officer, said risk had neither been clearly rewarded nor punished at the beginning of the year.

For example, he said, domestic stocks had been on a clear decline while North American technology stocks had been on a solid climb.

“At the current inflation levels, you can’t even expect impressive real return figures on an annual basis, especially when the end of the year is overshadowed by concerns regarding the development of the economy,” Huotari said.

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