Press release 23rd April 2014
Published 2014-04-23 at 9:00
Press release 23 April 2014
1.5 percent return on investment for the State Pension Fund
The return on investments of the State Pension Fund (VER) for the period from 1 January to 31 March 2014 was 1.5 percent,
while the corresponding figure for whole of 2013 was 6.4 percent.
VER’s ten-year average annual return is 5.4 percent.
The market value of VER’s investments was 16.5 billion euros at the end of March (16.3 billion euros on 31 December 2013).
VER investments comprised fixed income investments of 51.4 (51.6) percent, equities of 39.7 (39.9) percent, and other investments of 9.0 (8.5) percent.
The return of fixed-income investments was 1.5 percent, while the return of equity investments was 1.4 percent.
Other investments achieved a 1.1 percent return.
The development of returns was moderate during the first quarter of the year, despite strong market fluctuations. The market did not have a clear direction and the Ukrainian crisis has also had an effect on development. Stock market development was weaker than before due slight disappointments in economic development, particularly in the United States. As a result, interest rates also fell during the period. VER’s investment portfolio yielded returns of 1.5 percent during the first quarter of the year, says Managing Director Timo Löyttyniemi
The estimated pension contribution return for the period January to March is 407 million euros. The accumulation is 21 million euros higher than in the first quarter of 2013.
A total of 435 million euros of VER assets had been transferred to the state budget by the end of March. The corresponding figure from last year was 420 million euros.
Market situation
The global economy continued to improve during the first quarter of the year. However, cold weather in the United States slowed down economic activities somewhat during the first two months of the year, but in March, growth picked up considerably. This was particularly evident in car sales, which experienced a clear boost. The economic recovery of the Eurozone continued slowly during the first quarter. The inflation rate slowed to well below the European Central Bank's target. China’s economic growth remained gradual during the first quarter. Central banks maintained a relatively reflationary monetary policy.
Fixed-income investments
The return on fixed-income investments was 1.5 percent, while the corresponding figure for the entire year of 2013 was -1.6 percent.
The return on fixed-income investments was positive in the first quarter due to a strong decrease in interest rates. Markets with higher credit risk yielded the best returns, while emerging loan markets yielded the best absolute returns.
Listed equity investments
The return on equity investments was 1.4 percent, while the corresponding figure for the entire year of 2013 was 18.2 percent.
The return on equity investments remained slightly positive at the end of the first quarter. Investors’ risk appetite was high at the start of the year, but the stock market soon grew more cautious. There are still no clear sings of the global economy’s recovery, and Russia’s activities in Ukraine are further increasing the nervousness of investors. VER’s equity investments in the Nordic countries yielded the best returns of the quarter, while investments in Japan yielded the lowest returns.
Other investments
The return on other investments was 1.1 percent, while the corresponding figure for the entire year of 2013 was 5.7 percent.
In other investments, the returns during the first quarter mainly reflected the situation at the end of last year. Private equity funds had the best return during the first quarter, benefiting from the positive development of the stock market. The second best returns were from absolute return funds, thanks to successful equity investment strategies.
For more information, please contact:
Timo Löyttyniemi, Managing Director of VER, tel. +358 (09) 2515 7010, mobile +358 (0) 50 336 2094
The State Pension Fund (VER) is an off-budget state fund, established in 1990, which exists to provide for the state’s future pension liabilities and balance pension-related expenditure. VER is an investment organisation, and it is responsible for the professional investment of state pension funds. At the end of March 2014, the market value of VER's investment portfolio was 16.5 billion euros.
www.ver.fi
The interim report graphs
VER'S KEY FIGURES
| |
31.3.2014
|
31.3.2013
|
31.12.2013
|
|
Investments, MEUR (market value)
|
16 550
|
15 815
|
16 335
|
|
Fixed-income investments
|
8 501
|
8249
|
8 431
|
|
Listed equity investments
|
6 564
|
6 373
|
6 511
|
|
Other investments
|
1 485
|
1 193
|
1 392
|
| |
|
|
|
|
The breakdown of the investment portfolio %
|
|
|
|
|
Fixed-income investments *)
|
51,4 %
|
52,2 %
|
51,6 %
|
|
Listed equity investments
|
39,7 %
|
40,3 %
|
39,9 %
|
|
Other investments
|
9,0 %
|
7,5 %
|
8,5 %
|
|
*) Fixed income investments include an impact of derivatives of 0,3 %
|
|
|
|
| |
1.1.-31.3.2014
|
1.1.-31.3.2013
|
1.1. -31.12.2013
|
|
Return on investments, %
|
1,5 %
|
3,0 %
|
6,4 %
|
|
Fixed-income investments, %
|
1,5 %
|
0,2 %
|
-1,6 %
|
|
Listed equity investments, %
|
1,4 %
|
7,4 %
|
18,2 %
|
|
Other investments, %
|
1,1 %
|
0,6 %
|
5,7 %
|
The figures in this release have not been audited