Finland’s local authority pension provider Keva has seen investment returns of 7.5% for 2013, limiting losses to its commodities portfolio despite problematic fixed income markets.

The €37.8bn pension fund’s acting managing director Pekka Alanen, appointed in the wake of Merja Ailus’s resignation last year following a scandal over her personal expenses, said the results should be considered reasonable.

Its listed equity portfolio offered the strongest returns overall, at 16.6% ahead of the 14% returned by private equity and 11.8% by its €1.5bn hedge fund portfolio.

Keva’s commodities holdings, accounting for just 0.6% of all assets, lost 3.6% over 2013, and its €17bn fixed income portfolio returned just 0.4%, down from 11.5% in 2012.

Despite this, five-year real returns – spanning the years since the onset of the financial crisis – stood at 7.8%.

The local authority fund’s results compared favourably with those of Finland’s State Pension Fund (VER), despite the €16.3bn investor seeing slightly lower returns of 6.4% over the course of the last year.

However, VER’s listed equity holdings returned 18.2% and its real estate portfolio 5.3% – the latter nearly 2 percentage points ahead of Keva.

The reserve fund’s managing director Timo Löyttyniemi said the coming year would offer challenges in the shape of the US Federal Reserve’s tapering of quantitative easing, but he added that he was mostly positive about 2013.

“Last year, the market faced surprisingly few crises, which played a part in good equity market-price development,” he said.

The fund nevertheless saw its fixed income portfolio, accounting for more than half of its assets, post a 1.6% loss, which it blamed on interest rate increases over the second quarter.

It added that the 5.7% return from its other investments – falling outside listed equities and fixed income – was aided by investment in private credit funds facilitating direct lending, and a 6.6% return from its private equity portfolio.