FINLAND - Finland's State Pension Fund (VER) investments yielded a return of -6.4% in the first half of 2008, compared to 3.4% in the same period of 2007, the fund has announced.
Timo Löyttyniemi, managing director of VER, said: "The crisis generated by a lack of confidence continued in the financial markets during the first half of the year.
"The substantial downswing in share prices at the beginning of the year affected development for the entire first half. Share and interest market volatility remained pronounced."
Löyttyniemi added the fund had kept the equity weighting below normal since last autumn, but, as raw material prices and inflation expectations eased, signs of normalisation became visible in investment markets during the summer of this year.
VER said the average return for the last five years was 6.4%. During the first half of 2008, the return of the investment portfolio exceeded the return of benchmark index of the strategic investment allocation.
The return on the VER's fixed income portfolio in the first half was 0.4% (-1.2%) and the market value of fixed income investments amounted to €6.6bn (US$9.6bn).
Fixed income investments accounted for 58.4% of the VER's total investment portfolio. The fund said during H1 its interest rate risk was reduced by changing the strategic interest allocation to increase the money markets' basic allocation up to 25%.
The return on the fund's equity portfolio during the same period was -17.1% (9.3%) and the market value of the shares rose to €3.9bn (US$5.7bn).
Equity investments accounted for 34.4% of the VER's total investment portfolio.
VER said it did not employ equity derivatives in its investment operations, while other investments included real estate, infrastructure, venture capital and absolute return funds. They amounted to 7.2% of VER's total investment portfolio.
The Next Generation Pensions Committee is on a mission to promote and encourage younger voices in the industry. Kim Kaveh looks at its key objectives
This week's top stories included an analysis finding the cost of equalising guaranteed minimum pensions in schemes could hit FTSE 100 profits by up to £15bn.
Employers whose dividend to deficit recovery contribution (DRCs) ratios fall outside the "normal range" should expect to see higher regulatory scrutiny, although no fixed ratio will be set.
Investment consultants and fiduciary managers should expect a final decision on the investigation into the market to be published by the end of the year, the competition watchdog says.