Still loyal to the home market
The average pension fund in Finland invested 58% of total assets in Finnish bonds, according to data from Watson Wyatt at the end of 2000. The total exposure of pension fund portfolios to fixed income vehicles represented around 74% of total assets, with the proportion invested in bonds in the Euro-zone countries other than Finland accounting for 16% of total assets.
The reduced equity portfolio, only amounting to around 15% of total assets, was mainly invested in Finland, with 10% of total assets, with investments in stocks in other countries in Euroland only representing 2% of the total portfolio.
Finnish pension funds’ exposure to property investment is relatively high, representing 8% of total assets at the end of 2000. Cash and other investments accounted for 3% of the total investment portfolio.
Although there has been an increase in exposure to equities among pension funds in Finland, the percentage invested this way remains one of the lowest in Europe. And, even though diversification of investments in the Euro-zone has been growing in the past couple of years, investors in Finland still allocate most their assets to Finnish investment vehicles.