Finland’s Veritas has reported it made a narrow gain on its investments in the latest quarter, in spite of tumbling equity and bond markets, saying alternative investments such as real estate and hedge funds had generated positive returns so far this year.

Veritas, the smallest of the four pension insurance companies in Finland’s earnings-related pension system – and the first to report Q3 results this year – said this morning that its investments had generated a return of 0.5% in the third quarter, though the total return for January to September had been minus 6.2%.

In its financial report for the first three quarters of 2022, the pensions firm revealed the value of its investments rose to €4.12bn at the end of September from €4.08bn at the half-year point.

Veritas chief investment officer Kari Vatanen said: “The decline of listed shares has persisted, but alternative investments have generated positive returns in our investment portfolio.”

Between January and September, the pension insurer’s real estate investments gained 3.9%, while the category of “other investments” – largely comprising hedge funds –returned a positive 12.9%. Private equity generated 9.8%.

However, listed equities, which make up 27% of the portfolio, suffered an 18.5% loss in the nine months, while fixed income investments – with a 32% slice of the portfolio – ended the period with an 8.2% loss.

Vatanen said: “The outlook for the economy and the investment market continues [to be] bleak.

“Economic growth expectations have been gradually decreased throughout the first part of the year, and most likely, the eurozone is already in a recession,” he said.

Central banks were still fighting inflation by tightening monetary policy, which was translating into a rapid increase in market interest rates, he added.

“In recent years, the accommodative monetary policy of central banks has provided tailwinds for the equity market, but those tailwinds are now turning into headwinds,” the CIO said.

The largest two pension insurers, Varma and Ilmarinen, are due to release Q3 results tomorrow.

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