​Hedge fund gains help Varma to 10.2% in 2024; Elo, VER return 8.5%, 9.0%

Varma and Elo in Finland achieved investment returns of 10.2% and 8.5%, respectively, for 2024, according to newly-published figures, while the State Pension Fund of Finland (Valtion Eläkerahasto, VER) posted a 9.0% return for a year which saw strong stockmarket gains in the US.

In its 2024 financial results announcement this morning, mutual pensions insurance company Varma said total assets grew to €64.4bn by the end of 2024 from €59.1bn a year before – widening the provider’s size lead over its peer Ilmarinen, whose total assets, as reported yesterday, increased to €63.3bn from €58.9bn.

Risto Murto, Varma’s president and chief executive officer, said: “Pension assets grew remarkably last year, and it was one of the best years for investments in the past decade.”

The high returns could be attributed to broad diversification and the strong performance of the equity markets, he said, adding that there had been wide geographical differences.

Listed equities generated a 16.5% return, within equities as a whole which returned 14.9%, according to Varma’s annual figures. Private equity gave a 12.0% return, fixed income produced 4.7% and real estate investments resulted in a -2.8% return.

Varma revealed a near doubling of its return from hedge funds in 2024, to 10.5% from 6.2% in 2023 – an asset class which accounts for 17% of its total assets – a higher allocation than Ilmarinen, which has a 9.3% weighting to hedge funds.

Meanwhile Elo, the third-largest mutual pensions insurance company – after Varma and Ilmarinen – providing private-sector earnings-related pensions in Finland, reported total assets grew over the 12 months to €32.4bn from €30.0bn.

Elo’s CEO Carl Pettersson said the firm had done very well in terms of investment returns, and that solvency capital had increased by €758bn from the end of 2023.

“I’m also pleased with our improved cost efficiency,” he said, but added: “Despite the significant growth in our new sales market share, our insurance premium revenue decreased.”

Elo reported a 14.0% gain for listed equities, within an overall 11.2% return for equities, and made a 5.2% return on its fixed income investments.

Hedge funds – which have a 9.7% weighting in Elo’s portfolio – returned 13.1% for Elo, and real estate generated a positive 2.2%, following some €26m of write-downs within the provider’s directly owned property assets.

Elo said the weak economic situation in Finland had been reflected in increasing credit losses due to its customers.

Credit losses from insurance contributions – which occur in situations where company clients are unable to pay due to financial difficulties – amounted to €30.3m in 2024, up 21% from 2023, Elo said.

Meanwhile VER, the buffer fund for central government staff pensions in Finland, yesterday reported a rise in total assets to €24.2bn during 2024 from €22.8bn.

Listed equities, which make up 40.5% of assets, returned 14.6%, and liquid fixed income, with a 37.8% allocation, generated 3.1% over the year, according to VER’s results statement released yesterday.

Timo Löyttyniemi, the institutional investors’ CEO, said: “The state of the economy and monetary policy contributed to a sound investment market performance”, adding that expectations for economic growth had remained positive.

“However, the geopolitical situation continues to deteriorate and create uncertainty,” he said.

VER’s negative net transfer to the government budget would increase in future as a result of the amendments to the VER Act and rising pension expenditure, he added.

“Now the negative net transfer was 2% of the fund’s assets, but it is expected to increase to 4–5% in the coming years,” Löyttyniemi said, adding that these factors would limit the fund’s growth in the next few years.

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