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Hedge Funds Deliver Strong Results for Finland’s Largest Investors

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Stockholm (HedgeNordic) – Hedge funds delivered strong performance across the board in 2024, a trend clearly reflected in the portfolios of Finland’s largest institutional investors. Five major investors, collectively managing €25.7 billion in hedge fund investments at the end of 2024, achieved an asset-weighted return of 11.1 percent on their hedge fund portfolios last year. Individual returns for these portfolios ranged from 9.8 percent to 13.1 percent.

The five institutional investors – Elo, Varma, Ilmarinen, Keva, and the State Pension Fund – saw their hedge fund investments grow from a combined €22.7 billion at the end of 2023 to €25.7 billion by the end of 2024. When including Veritas, Finland’s fourth pension insurance company, the total hedge fund investments of these six Finnish institutional investors exceed €26 billion.

Returns for Hedge Fund Portfolios in 2024 – Finnish Institutional Investors

Varma, Finland’s largest hedge fund investor and the biggest among the four pension insurance companies, achieved a 10.5 percent return on its hedge fund portfolio in 2024. At year-end, the portfolio amounted to €10.7 billion, representing 17 percent of Varma’s total assets, up from 16 percent at the close of 2023. This increase reflects both strong performance and additional net investments throughout the year.

Elo, the third-largest of Finland’s four pension insurance companies, posted the strongest performance among hedge fund portfolios, with a return of 13.1 percent in 2024. By year-end, Elo’s hedge fund allocation had grown to €3.2 billion, representing 9.7 percent of its €32.4 billion investment portfolio, up from 8.7 percent at the end of 2023. This increase is likely due to a reallocation of hedge fund investments, returning to levels observed in mid-2023.

Keva, Finland’s largest pension fund, also saw strong performance from its hedge fund portfolio, which achieved a net return of 12.7 percent in 2024. At year-end, Keva’s hedge fund allocation totalled €4.9 billion, representing 6.9 percent of its overall portfolio, consistent with its allocation at the end of 2023.

The State Pension Fund of Finland also experienced strong returns from its hedge fund investments, posting a 10.9 percent gain in this segment. The hedge fund portfolio totalled €1.04 billion at the end of 2024, representing 4.3 percent of its overall portfolio, up from €935 million at the close of 2023. The fund’s team noted that “Overall returns were healthy across hedge fund strategies, as a year of strong market movements and widening yield spreads provided a favourable market environment for active strategies.” The best returns were achieved by multi-strategy funds, quantitative funds, and equity-focused strategies. Conversely, macro funds, CTAs, and tail hedge strategies underperformed. Macro funds, in particular, struggled due to rapid market shifts driven by changes in interest rate expectations.

Ilmarinen, the second-largest of Finland’s four pension insurance companies, achieved a 9.8 percent return on its hedge fund investments in 2024. By the end of the year, Ilmarinen had €5.9 billion, or 9.3 percent of its total portfolio, allocated to hedge funds, up from €5.1 billion, or 8.6 percent, at the close of 2023. Veritas, the smallest of the four pension insurers, has not yet reported its figures for 2024.

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Eugeniu Guzun
Eugeniu Guzun
Eugeniu Guzun serves as a data analyst responsible for maintaining and gatekeeping the Nordic Hedge Index, and as a journalist covering the Nordic hedge fund industry for HedgeNordic. Eugeniu completed his Master’s degree at the Stockholm School of Economics in 2018. Write to Eugeniu Guzun at eugene@hedgenordic.com

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