Press release 30.1.2014

Press release 30 January 2014

Advance notice of the return of the investment operations in 2013

6.4 per cent return on investment for the State Pension Fund

The return of the investments of the State Pension Fund (VER) was 6.4 per cent in 2013 (11.3 per cent in 2012). The average five-year return of the fund was 8.5 per cent, while the ten-year average return was 5.7 per cent.

The market value of the fund’s investments was 16.3 billion euros at the end of the year (15.4 billion euros in 2012). VER investments comprised 51.6 (54.6) per cent in fixed income investments, 39.9 (38.4) per cent in equities, and 8.5 (7.0) per cent in other investments.

The return of fixed-income investments was -1.6 per cent and the return of equity investments was 18.2 per cent. Other investments reached a 5.7 per cent return.

2013 yielded reasonably good returns for pension investors. In many respects, economic growth has been twofold. In the United States, growth has continued steadily. Europe and the emerging market economies, however, have their own structural problems. In 2014, the United States' growth has the potential to spread globally. Challenges will include the spill-over effects that the United States Federal Reserve System’s tapering efforts will have on interest rates and emerging market economies. Last year, the market faced surprisingly few crises, which played a part in good equity market price development, says Managing Director Timo Löyttyniemi

The press release on the return of 2013 will be published on 5 March 2014

For further details, please contact:

Managing Director Timo Löyttyniemi, tel. +358 9 2515 7010, mobile +358 50 336 2094

The State Pension Fund (VER) is a fund external to the state budget, established in 1990, whose proceeds the Finnish state uses to prepare for the financing of future pension liabilities and the balancing of pension costs. VER is an investment organisation and is responsible for investing the state's pension assets. The market value of VER’s investment portfolio was EUR 16.3 billion at the end of 2013.

www.ver.fi

2013 in brief

Market situation

The development of the global economy was slow at the beginning of the year, but growth picked up considerably towards the end of the year. Confidence indicators are predicting that growth will continue in developed countries. Even in the emerging markets, growth will most likely continue relatively strongly, though expectations are lower than before. The moderate tapering of the United States’ monetary policy will reduce liquidity and may, as a result, be reflected in the fluctuating returns from the most risky asset categories. Other central banks have continued to maintain a light monetary policy.

Fixed income investments

The return on fixed income investments was -1.6 per cent, while the corresponding figure for the whole of 2012 was 8.8 per cent.

The return on fixed income investments remained negative. This was due to the rise in interest rates in May-June. High-yield and Investment Grade corporate bonds yielded the highest returns over the period.

Quoted equity investments

The return on equity investments was 18.2 per cent, while the corresponding figure for the whole of 2012 was 16.8 per cent.

2013 turned out to be a good year for equity investments. However, the year was quite two-sided in the stock market. Developed markets, such as Europe (including the Nordic countries), the US and Japan yielded very good returns, while emerging markets faced a difficult year. As a result, the euro-denominated returns from emerging markets remained for the most part negative throughout the year.

Other investments

Return on other investments was 5.7 per cent, while the corresponding figure for the whole of 2012 was 3.5 per cent.

The year went quite well for other investments. Of all the investment categories in the portfolio, the highest returns were yielded by private credit funds that invest in direct lending, and private equity funds, which gained from the strong equity market.

VER'S KEY FIGURES

The figures in this release are preliminary and have not been audited.