Finnish earnings-related pension provider, Varma, has reported a negative return of -1.9 per cent in the first quarter (Q1) of 2022.

Publishing its interim results, the pension company said the value of its investments amounted to €57.6bn at the end of March, compared to €59bn at the end of 2021. However, it said its solvency capital remained strong at €5.8bn (€16.9bn end 2021), equating to 1.8 times the solvency limit.

Commenting, Varma CEO, Risto Murto, said: “The war in Ukraine is a deep social and humanitarian crisis, the effects of which on the investment market have so far remained quite limited, considering the devastation of the war.”

Of Varma's investments, private equity investments returned 5.5 (16.0) per cent, unlisted shares 5.2 (5.2) per cent, real estate investment funds 3.4 (1.1) per cent and hedge fund investments 2.1 (4.5) per cent. Among the asset classes, the return on equity investments was -3.5 (10.8) per cent, on fixed-income investments -2.7 (-0.3), on real estate investments 2.0 (0.9) and on other investments 2.2 (4.4) per cent.

“The high weight of US investments provided protection against a fall in the exchange rate at the beginning of the year. In the United States in particular, stock markets have recovered rapidly, well above pre-war levels. Otherwise, the mood in the capital markets has been relatively calm since the war broke out,” Varma executive vice president, Reima Rystölö, said.

“Despite the strong recovery in share prices, the rest of the year does not look rosy for investors. The war and economic sanctions against Russia further accelerated inflation, which is the last thing the market needed. However, central banks have an urgent need to tighten their monetary policy, even though there is a risk of stagflation, a combination of high inflation and recession,” Rytsölä added.

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