FINLAND - Kuntien Eläkevakuutus (Keva), the Local Government Pensions Institution, has reported a 2009 return of 18.9% after taking advantage of upswings in the markets, while Valtion Eläkerahasto (VER), the State Pension Fund, has also produced a positive result.

Preliminary figures from Kevarevealed its investment return in 2009 amounted to €3.9bn, or 18.9%, to bring the total value of the scheme’s assets to €24.8bn - up from around €20bn at the end of 2008. This equates to an average return over the last five years of 4.7%.

Merja Ailus, chief executive of Keva, claimed 2009 was highly exceptional in terms of investment operations because of the dramatic turn in capital markets in the spring when “the drastic plunge took an upswing overnight”.

Figures published ahead of the full report later in the year showed the fund’s equities portfolio produced the best return of 35% on assets held, while bonds also performed well to deliver a 15% return.

Timo Viherkenttä, deputy chief executive at the scheme, added: “The rise of the investment markets in the aftermath of the financial crisis has been surprisingly fast. The LGPI’s returns have been supported, in particular, by additional investments implemented at favourable valuations in emerging markets and in the European and US corporate bond markets.”

That said, Viherkenttä suggested development of investment markets would this year depend on the effects of tightening monetary policy.

Meanwhile VER’s preliminary financial statements showed the state pension fund generated an investment return of 16.4% in 2009 - up from -15.8% the previous year - as the scheme took advantage of market pricing to increase its equity and loan holdings.

The value of the fund increased by almost €2bn, up from €10.4bn to €12.3bn by the end of 2009.

Its asset allocation comprised 41% in equities, 55% in fixed income and 4% in other investments, such as private equity, infrastructure, absolute return and real estate funds. This compares to 31% in equities, 61.4% in fixed income and 7.6% in other investments at the end of 2008.

Timo Löyttyniemi, managing director of VER, said: “We were able to capitalise on our market position during the financial crisis by being a net buyer. We acquired a significant number of shares and long-term corporate loans when they were competitively priced. The investment market recovered quickly from spring 2009 onwards. We are very happy with last year’s result.”

VER’s equity portfolio was mainly invested in Europe and Nordic countries with 33.1% and 31.5% respectively, with the remainder split among Japan, North America and emerging markets. The fixed income portfolio, meanwhile, comprised 43.7% in EMU governments and 35.5% in corporate bonds, with the remainder invested in money markets.

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