VER, the Finnish State Pension Fund, returned 7.4% on its investment for the first quarter of 2015, thanks to the performance of listed equities.

The asset class, which makes up 40.3% of the pension fund’s portfolio – valued at €18.7bn as at 31 March – returned 16.7% over the first three months of the year, compared with 1.4% for the same period in 2014, and 11.7% for calendar year 2014.

The overall performance takes the average rate of return for the past 10 years to 5.9%.

Maarit Säynevirta, acting managing director at VER, said: “In early 2015, the yields on investments grew considerably – the return on equities was particularly excellent.

“Both in equities and fixed income instruments, the positive market developments were boosted by the reflationary monetary policies adopted by the central banks.”

But he warned: “In the future, low general interest rates will pose major challenges in terms of investment returns.”

Fixed income returned 1.8%, improving on the 1.5% returned in the first quarter of 2014.

The return for 2014 as a whole was 4.9%.

The asset class makes up 50% of the portfolio, virtually the same as at the end of 2014.

The first-quarter return from alternatives – now 6.9% of the portfolio – was only 0.8%, compared with 1.1% for the same period in 2014.

VER said: “The best returns were earned by private equity and real estate funds, which both yielded a positive result. The strong equity market contributes to earnings in private equity investments.

“With the low interest rates stepping up investor interest in real property, the positive mood has continued to prevail in the real estate market during the first part of the current year.

‘Other investments’, which make up 3% of the portfolio, returned 0.9%.

VER said, within this asset class, the absolute return funds returned 3.3%.

It added: “Of these funds, the best performance was put in by macro funds that benefited from trends that had already started in 2014, such as the strengthening US dollar.

“Credit spreads were reduced further while the first few months were difficult, particularly for distressed funds.”