Finland’s largest institutional investors remain committed allocators to hedge funds, yet the State Pension Fund of Finland’s (VER) hedge fund allocation stood out as the top performer so far in 2025. In the third quarter, VER’s hedge fund portfolio, valued at €1.07 billion at the end of September, extended its strong momentum from the first half of the year and previous periods, bringing year-to-date returns to 7.5 percent, up from 5.0 percent at mid-year.
“Hedge funds continued to put in a robust performance in the third quarter of the year,” notes the team at VER. The positive market environment, especially in equities, contributed to strong performance among equity-focused strategies. Trend-following CTA strategies rebounded during the quarter, marking “a clear improvement compared to the lacklustre performance earlier in the year,” the team adds, while macro funds posted more modest gains. Over the first nine months of 2025, quantitative strategies remained among the strongest performers. Despite a recovery in the third quarter, VER’s CTA exposure still ranks as the weakest performer within the portfolio on a year-to-date basis.
“Hedge funds continued to put in a robust performance in the third quarter of the year.”
The State Pension Fund’s portfolio of hedge funds and systematic strategies returned 7.5 percent in the first three quarters of 2025, extending the strong performance achieved last year and in previous years. In 2024, VER’s hedge fund allocation advanced 10.9 percent. At the end of September, VER managed €24.1 billion in assets, of which €1.07 billion, or 4.3 percent, was allocated to hedge funds – a segment that has been a meaningful contributor to overall returns. The five-year annualized return of the hedge fund allocation now stands at 7.4 percent.
VER’s hedge fund allocation outperformed those of other major Finnish institutional investors by a wide margin. Finland’s largest pension fund, Keva, reported a 2.7 percent decline in its hedge fund portfolio over the first three quarters of 2025, while Elo, the third-largest of the four pension insurance companies, saw a 0.2 percent decrease. Veritas, the smallest of the group, achieved a modest 1.4 percent gain during the same period. Meanwhile, Varma, Finland’s largest hedge fund investor and the biggest of the four pension insurers, posted a 3.5 percent return on its hedge fund portfolio for the first nine months of the year.
