Finnish pensions assets shrank EUR 6.4bn in 2018

Finnish pension investors cut down on their allocation to Finland by some 1.3 percent point last year, figures by Finnish Pension Alliance indicate. Real estate pulled the longest straw, but the outcome still was a negative total return of 3.5 percent.

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Assets in Finland's earnings-related pension system declined by EUR 6.4bn last year, announces the Finnish Pension Alliance (Tela). Second pillar pension assets totaled EUR 193.4bn and yielded a negative return of 3.5 percent.

Investments in other eurozone markets and outside the eurozone increased, whereas investments in the domestic realm reduced slightly.

At the end of last year, nearly a fourth (24.5 percent) of assets were invested in Finland, down from 25.8 percent the year earlier. More than half all pension assets (55.6 percent) were invested outside the eurozone, which is slightly more than at the end of 2018.  Investments in other countries in the eurozone increased from 19.4 percent to 19.9 percent.

Tela's analyst Kimmo Koivurinne notes that returns were pulled down particularly by equities, which yielded a negative return of 5.7 percent, as well as low yields from fixed income (negative 2.3 percent). But recovery is already in sight.

"According to data for early 2019, equities are again yielding sound returns," Koivurinne notes.

"Albeit returns from equities were negative last year, taking exposure to equities is a safe strategy in the light of returns in the long run," he adds.

Real estate investments pulled in a return of 4.7 percent, which compensated the overall outcome.

Over the year, exposure to equity investments grew from 53 percent to 53.4 percent of the average portfolio in terms of assets under management. Exposure to fixed income fell from 38.7 to 37.8 percent, whilst exposure to real estate grew from 8.3 to 8.8 percent.

PE and RE balance equity losses at Finnish pension giants 

Hedge funds hard to beat, says EUR 44 billion Finnish pension fund 

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