“This is the first time since we started our statistics in 1997 that there has been a relative increase of pension fund investments in Finland. Funds now have 31 per cent allocated to the domestic market compared to 28.6 per cent a year ago,” said Matti Leppälä, director at Tela.

One of the reasons was investors’ higher allocation to equities after the new investment and solvency regulations came into force in 2007, leading to a boost in domestic holdings. The Finnish equity market, meanwhile, has performed better than other markets. There has also been political debate about the need for more domestic investment.

Tela’s statistics showed that funds also continued adding hedge funds to their portfolio. Their allocations increased by €2bn and they now have €5.5bn invested in hedge funds, compared to €3.6bn last year.

Veritas Pension Insurance posted the highest returns (7.3 per cent) of the seven competing Finnish pension insurance companies, for the second year running. It said it was down to strong returns from its property portfolio, which pulled in 12.8 per cent.

Varma and Ilmarinen came second with returns of 6 per cent and 5.7 per cent respectively. Varma said it was because of diversifying into hedge funds, property and private equity. Its private equity investments returned more than 40 per cent. Jussi Laitinen, departing CIO at Ilmarinen, said he regretted having too much fixed income and not enough hedge funds.

CL

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