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Impact Investing

IPE special report May 2018

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VER returns 5.3% on equity gains

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  • VER returns 5.3% on equity gains

FINLAND -Improvements in equity markets helped Valtion Eläkerahasto (VER), the State Pension Fund, post a return of 5.3% in the first half of 2009.

Figures from the half-yearly report showed the value of the investment assets reached €10.99bn up from €10.36bn at the end of 2008, as income from pension premiums reached €813m.

VER, which operates within specific investment limits set by the Ministry of Finance, revealed its fixed income portfolio - equivalent to 59.7% of total assets - returned 3.4% in the first half increasing in value to €6.6bn.

Over the first six months of this year, the pension fund continued to allocate its fixed income investments to corporate bonds and commercial papers, with corporate bonds now accounting for almost 32% of the portfolio, while investments in commercial paper - requested by the government to ease the financial crisis - had reached €357.1m out of a maximum limit of €500m.

That said, the best performance was actually achieved in the equity portfolio, which accounts for 34.8% of the fund up from 31% at the end of 2008, as it returned 12.2% and increased in value from €3.2bn to €3.8bn in six months.

The other 5.5% of the fund is invested in alternatives - comprised of 39.7%, in real estate funds, 28.2% in absolute return, 20.6% in private equity and 11.5% in infrastructure - although this was the only asset class to produce a negative result in the first half with a return of -11%, and a fall in value to €594m.

But Timo Löyttyniemi, managing director of VER, said: "The acute financial crisis ended in the spring, and it appears that we have now passed the steepest slide in the global economy. In fact the investment markets' optimism continued after the end of the review period."

In the interim report VER meanwhile confirmed it had appointed the Helsinki branch of JP Morgan Europe to provide clearing and custody operations for the fund, following a competitive bidding process after its previous provider, Nordea Bank, sold its institutional investor custodian and securities clearing services. (See earlier IPE article: VER loses 2.4% in Q1)

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

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