Finland’s public sector pension fund, Keva, posted a 0.2 per cent loss in the first half of 2025 as US dollar weakness wiped out gains from equities.

The rapid devaluation followed US tariff policy changes, which the fund said dented euro-denominated returns despite partial currency hedging.

Assets under management stood at €70.7bn at 30 June, down from €71.5bn at year-end but higher than €68.5bn a year earlier.

Hedge funds and private equity were the hardest hit by the currency swing, returning -4.6 per cent and -2.7 per cent respectively.

These asset classes often carry substantial US-dollar-denominated exposure, meaning that the rapid fall in the greenback likely compounded underlying market losses.

Real estate, including funds, returned -0.3 per cent, while fixed income delivered -1 per cent. Listed equities – accounting for 41.3 per cent of the portfolio – gained 2.4 per cent but could not offset the losses elsewhere.

Fixed income, including derivatives, made up 26.6 per cent of the portfolio, with 19.3 per cent in private equity, 6.9 per cent in real estate and 6.5 per cent in hedge funds.

According to Keva CEO, Jaakko Kiander, the poor return during the beginning of the year was due to the uncertainty caused by rapid changes in the USA’s tariff policies.

Keva CEO, Jaakko Kiander, said: “This was evident first and foremost in the devaluation of the dollar. Due to changes in the exchange rates, the euro-denominated returns for Keva’s investment portfolio decreased. Keva’s financial situation remained stable, however, and the pension funding rate remained high.”

Meanwhile, Keva CIO, Ari Huotari, noted broader concerns behind the dollar’s fall, including US indebtedness and the potential erosion of central bank independence.
“Despite partial currency hedging, the rapid devaluation of the dollar has significantly decreased the euro-denominated returns on investments also for Keva,” he added.

Over the longer term, performance remains robust, with a cumulative, capital-weighted real return of 3.8 per cent a year since 1988, and a five-year average real return of 3.3 per cent.

Contribution income rose 3.2 per cent year-on-year to €3.3bn, aided by payroll growth, while pension payouts to the local government and wellbeing services county sector increased by the same rate to €3.7bn, reflecting index-linked adjustments and a growing recipient base.

At the end of June, 544,000 employees in Keva’s member bodies had earnings-related pension insurance.

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