The State Pension Fund of Finland (VER) reported a 0.6 percent gain in its overall investment portfolio during the first quarter of the year. Fixed-income investments, which made up 39.4 percent of the portfolio, edged up by 0.7 percent, while listed equities edged down by 0.3 percent. VER’s hedge fund portfolio – valued at €1.04 billion and representing 4.3 percent of the total portfolio at the end of 2024 – gained 1.7 percent in the first quarter, following a strong 10.9 percent return in 2024. The VER team described the quarter as a “mixed” period for hedge fund returns.
“In January, the strong performance of the previous year continued, and returns were very solid across a wide range of strategies,” notes the team at VER. “In February and March, a portion of the early year’s returns was eaten up as market uncertainty led to strong risk aversion.” Equity long/short, CTA, and multi-strategy funds in the portfolio underperformed during this period. “In the uncertain market environment, the portfolio’s relative value strategies and tail hedge strategies that benefit from increased volatility were the best performers.”
“In January, the strong performance of the previous year continued, and returns were very solid across a wide range of strategies.”
The State Pension Fund of Finland (VER) generated strong returns from its hedge fund investments in 2024, posting a gain of 10.9 percent. The long-term performance has also been solid: over the past five years, VER’s hedge fund portfolio has delivered an annualized return of 8.0 percent. This outpaced the 2.1 percent return from listed fixed-income investments, the 6.2 percent return from other fixed-income strategies – including private credit funds and direct lending – and the 1.0 percent return from real estate funds. However, the hedge fund portfolio’s five-year return lagged behind those of listed equities, private equity funds, and infrastructure investments.