FINLAND - Etera Mutual Insurance Company has reported a nine-month return of 8.3% and said the market value of its assets has increased to €5.2bn.

The pension fund - which has an asset allocation of 58% in fixed income, 25% equities, 15% real estate and 2% in other investments - said the improved performance had helped to strengthen the scheme's solvency position to 17.3% of technical provisions and 2.5 times the solvency limit.

Mika Pesonen, chief investment officer at Etera, said: "Our even stronger solvency gives us more leverage room in our investment activities. The most important this is, however, ensuring long-term security and profitability."

Etera's fixed income portfolio, valued at just over €2bn, returned 9.3% overall, with the highest return of 10.6% produced by the bonds mandate. But despite representing only a quarter of the pension fund's assets the equity portfolio produced the highest sector return of 13.6%.

This was driven primarily by investments in listed equities, which returned 21%, although private equity reduced the overall performance with a return of -19.9%.  Real estate produced an overall positive return of 0.3%, but the 2% return from direct property investments was offset by the -7.6% from real estate investment funds and UCITs.

In addition, the scheme's alternatives portfolio - comprising absolute return investments and commodities - returned -4.3% overall, leaving the two asset classes returning -4.4% and -2.7% respectively.

Despite the mixed performance, Pesonen noted: "Our return on investments has improved compared with the results for the first-half of the year. The return on fixed income investments, in particular, rose to a good level."

In the three months since the end of June 2009, the market value of the pension assets increased €340m from €4.8bn to €5.2bn, while the asset allocation of the scheme changed slightly and reduced fixed income from 63% to 58%, while equities increased from 19% to 25%. (See earlier IPE article: Ilmarinen investments jump €2bn on 6.6% return)

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