Finland’s Keva, which is responsible for the funding of local government pensions, made a total return of 6.8 per cent (market value), equivalent to €4.2bn, in 2023.

Equities was the best performing asset class over the year, generating a return of 10.1 per cent, followed by fixed income – 9 per cent, hedge funds – 6.6 per cent and private equity – 2.8 per cent. However, its real estate investments generate a return of -6.1 per cent.

Keva’s investment assets had a market value totalling €65.7bn at year-end 2023. Of this, listed equities accounted for 33.7 per cent fixed income investments - 27.4 per cent, private equity investments (including unlisted equities) - 19.0 per cent, hedge fund investments - 6.9 per cent and real estate investments for - 6.9 per cen of risk-based allocation. Derivatives had an impact of 6.1 per cent on risk-based allocation.

Commenting, Keva CEO, Jaakko Kiander, said: “Even though global economic development was volatile in 2023, growth was nevertheless reasonable compared to expectations. Inflation slowed clearly during the year. As the worst concerns of a recession receded and expectations of monetary policy eased, equity and fixed income investments performed rather well.”

Keva CIO, Ari Huotari, said the good investment performance was largely driven by the rally seen in the second half of last year.

“At the end of the year, the markets were optimistic that inflation would recede with less impact on the economy than expected and there was optimism about central bank interest rate cuts. Thus, there was quite a ‘Santa Claus rally’ in listed investments. On the other hand, impairments were made across the board in real estate investments last year," Huotari said.

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