The State Pension Fund of Finland (VER) allocates just over €1 billion to hedge funds and systematic strategies, representing a modest 4.3 percent of its €25.8 billion portfolio. Despite its relatively small weight, the allocation has continued to punch above its size. VER’s hedge fund portfolio returned 11.3 percent in 2025, following a similarly strong 10.9 percent gain in 2024.
In conjunction with the release of its annual report, the team at the State Pension Fund of Finland (VER) describes 2025 as a supportive environment for hedge fund strategies. “Despite turbulence, the year was strong overall and risk-friendly for hedge funds,” the team at VER writes. The strongest contributions came from Asia-focused and event-driven managers, where VER increased allocations over the course of the year. According to the report, robust equity market performance across Asia, a pickup in mergers and acquisitions activity, and pronounced regional dispersion created fertile conditions for these strategies, translating into solid returns.
“Despite turbulence, the year was strong overall and risk-friendly for hedge funds.”
Macro strategies also operated in a broadly favourable environment, although “there was considerable variation between managers.” CTA strategies faced a more challenging start to the year due to rapid shifts in market direction, which complicated trend-following models. While CTAs ultimately finished the year with positive returns, they were the weakest contributors within VER’s hedge fund portfolio on a full-year basis.
VER operates as a government-run buffer fund designed to stabilise the financing of Finland’s state pensions and support public finances over the long term. Although hedge funds account for only a low single-digit share of assets, their double-digit returns in 2024 and 2025 have reinforced the diversification benefits of the allocation.
Varma, Finland’s largest hedge fund allocator and the biggest of the country’s four pension insurance companies, delivered a total return of 7.5 percent in 2025. The result was driven primarily by strong listed equity markets, while its €10.6 billion hedge fund portfolio generated a 5.0 percent return. Although below the 10.5 percent achieved in 2024, the hedge fund allocation still held up relatively well in a year marked by considerable performance dispersion among its underlying hedge fund managers.
Among other Finnish institutional investors that have reported full-year results, hedge fund portfolios showed notable dispersion in performance. Keva saw its €4.8 billion hedge fund portfolio decline marginally by 0.1 percent in 2025, while Veritas Pension Insurance reported a 2.6 percent gain on its roughly €500 million allocation.
