Veritas, the smallest of Finland’s four pension insurance companies which provide the bulk of the country’s earnings-related pensions, has poached a top investment manager from one of the big two pension insurers.
Kari Vatanen, who was head of cross asset derivative strategies and allocation at the €47.4bn pension insurer Varma until now, has been appointed as Veritas’ new CIO.
He will replace Niina Bergring who left at the end of December after six years in the role to become executive vice president, asset management at Aktia Bank.
Vatanen – now on “gardening leave” from Varma, according to his LinkedIn profile – has spoken out in Veritas’ announcement of his appointment about the current need for institutional investors to be agile and change their beliefs.
“It is hard to imagine a more exciting time than now to start working as a CIO in a pension insurance company,” said Vatanen, who will take up his new role at the €3.5bn pension provider on 1 March.
“Speaking of economic growth, we are in the late cycle. Behind us we have more than 10 years of rising equity market and the rates have declined to the extreme low levels,” he said.
Though traditional asset classes had produced strong returns for many years, he said risks seemed higher in forthcoming scenarios than expected returns.
Capital markets were already strongly supported by central banks, he said, and all markets could be driven down at the same time when growing geopolitical tensions erupted, adding that there were then no means left to diversify the risks in the investment portfolio.
“In this economic environment it is valuable for institutional investors to be agile and able to update their investing beliefs,” Vatanen said.
When questioned by IPE, Vatanen declined to comment on any concrete plans he had for Veritas, but referred to his previous writing on diversification and the lack of it.
“Diversification to the alternative asset classes or even to the macro factors or alternative risk premia doesn’t automatically guarantee well-diversified portfolios in all the economic environments,” he told IPE.
“Investors should be aware of the tail dependencies between asset classes or factors and be ready to adjust their expectations and portfolio risk levels in the changing market environment,” he said.
According to first half 2019 report, Veritas had 39.3% of its assets in fixed income, 36.8% in equities, with 14.5% in real estate and 9.3% in “other” investments – a category which included 7.7% in hedge funds.