Ari Huotari, the soon-to-retire chief investment officer of Finland’s largest pension fund Keva, warned of troubling factors now at play for US stocks – after the positive market developments which helped its returns in the third quarter of this year.
Municipal pensions giant Keva this morning posted a 3.4% return for January to September – an improvement on the 0.2% loss it reported at the half-year stage – with the market value of its investments rising to €73.1bn at the end of September, up from €71.5bn at the end of 2024.
Among asset classes, the Helsinki-based pension fund’s listed equities generated 8.9% for the nine-month period, and fixed income produced a 0.5% gain.
Keva’s private equity investments made a loss of 0.7% – although that return is an improvement on the -2.7% return at the half-year stage.
Huotari, who will be replaced on 1 November by Maaria Kettunen, commented on the nine-month figures, saying market developments had been quite positive following the turbulence in spring and the rapid weakening of the US dollar.
But he added: “Recently, however, the actions of the US presidential administration have stirred growing unease.
“In addition, concerns have re-emerged regarding the smaller, less regulated banks in the US banking sector,” he said, adding: “The end of the year may once again prove to be rather interesting.”
Varma and Ilmarinen, the two largest pension insurance companies on the private-sector side of Finland’s earnings-related pension system, are due to report their third-quarter results tomorrow.
Veritas, the smallest of the four pension insurers after Elo, today reported a 5.2% return on its investments between January and September, with a 3.2% gain in the third quarter alone.
Equity investments had returned 8.5% in the nine-month period and fixed income generated 2.5%, Veritas said.
Private equity investments for Veritas generated a positive 1.9% between January and September.
Laura Wickström, CIO at Veritas, said that after the interest rate cuts initiated by the US Federal Reserve, markets now expected further cuts, which would in turn support both equity markets and economic growth.
But she warned that although rate cuts helped curb debt-related interest expenses, there were political consequences of government indebtedness, and it was hard to cut public spending.
“The US government shutdown and the political crisis in France are both examples of this,” said Wickström.
“The problems caused by excessive debt could also escalate in Finland if economic growth is not restored,” she said.
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