Stockholm (HedgeNordic) – 2022 was a difficult year for investors, including well-diversified institutional investors, as equity and bond markets experienced double-digit declines. Finnish pension insurer Ilmarinen saw its investment portfolio book a loss of 6.6 percent for 2022, resulting in an investment loss of €4.0 billion. Ilmarinen’s hedge fund portfolio, which accounted for 8.6 percent of the overall portfolio at the end of 2022, returned 8.2 percent during the year to offset some of the broader portfolio’s losses.
“Accelerating inflation, tightening monetary policy and concerns over economic growth depressed the investment markets, and performance was broadly negative during the year,” says Ilmarinen’s Deputy CEO and Chief Investment Officer, Mikko Mursula (pictured). “In the equity markets, most equity indices fell 10–20 percent, while the returns on fixed income investment were historically weak due to rising interest rates and credit risk margins.”
“Accelerating inflation, tightening monetary policy and concerns over economic growth depressed the investment markets, and performance was broadly negative during the year.”
Ilmarinen’s equity investments, which include both public and private investments, returned a negative 10.2 percent in 2022, compared to an advance of 28.0 percent in 2021. Ilmarinen had €30.5 billion of its €60.6 billion investment portfolio allocated to equity investments at the end of last year. The total return on fixed-income investments, which includes bonds, fixed-income funds, other financial market instruments and loan receivables, was negative at minus 5.2 percent in 2022. Real estate investments, which accounted for 12.1 percent of the overall portfolio at the end of 2022, returned a positive 1.3 percent last year.
The portfolio of other investments, which includes commodity investments, hedge fund investments and currency investments, edged down 1.1 percent during 2022. Ilmarinen’s hedge fund portfolio, which amounted to €4.8 billion at the end of last year, returned 8.2 percent in 2022 to generate gains of €349 million. Ilmarinen has gradually increased its allocation to hedge funds in recent years from under 2.0 percent in 2017 to 6.8 percent at the end of 2021 and 8.6 percent at the end of 2022. Ilmarinen’s hedge fund portfolio predominantly includes global players but also features several Nordic hedge funds such as Brummer Multi-Strategy, which also contributed to returns after its EUR share class delivered a return of 6.3 percent in 2022.