Stockholm (HedgeNordic) – All four pension insurance companies in Finland – Elo, Ilmarinen, Varma, and Veritas – maintain a more sizeable share of their portfolios in hedge funds compared to several years ago. Their hedge fund portfolios delivered positive – yet very different – returns during 2022.
Ilmarinen’s hedge fund portfolio, which reached €4.8 billion at the end of 2022 or 8.6 percent of the overall portfolio, returned 8.2 percent last year to offset some of the broader portfolio’s losses (read more). Varma, which maintains the highest allocation to hedge funds among the four pension insurers, saw its hedge fund portfolio return 2.3 percent in 2022 after enjoying a 15.3 percent return in 2021. Varma had 15 percent of its portfolio allocated to hedge funds at the end of 2022, amounting to €8.4 billion in investments.
Elo, the third-largest of the four pension insurance companies in Finland’s private sector earnings-related pension system, saw its hedge fund portfolio return a similar 2.3 percent in 2022. Elo’s hedge fund investments accounted for 9.3 percent of its overall portfolio at the end of 2022, equivalent to €2.6 billion. The hedge fund portfolio of Veritas, the smallest of the four pension insurers, returned a more impressive 12.3 percent in 2022. Veritas had €337 million or 8.1 percent of the overall portfolio allocated to hedge funds at the end of last year.
“Alternative investments served as the bright spot of the year, with their positive development mitigating the negative return impact of the equity and fixed-income markets.”
Veritas’ bucket of “other investments,” more than half of which comprise hedge funds, garnered a 10.3 percent return in 2022. “Alternative investments served as the bright spot of the year, with their positive development mitigating the negative return impact of the equity and fixed-income markets,” says Kari Vatanen (pictured), CIO of Veritas. The Turku-headquartered pension provider’s fixed-income investments incurred a loss of 7.4 percent in 2022, equity investments experienced a loss of 8.4 percent, while real estate investments delivered a positive return of 3.3 percent and other investments returned 10.3 percent.
