Finnish earnings-related pension provider, Varma, has seen its assets under management hit €60bn for the first time.

Publishing its interim results, Varma attributed the rise in the value of its assets to good equity returns in the first quarter of this year. Varma's investments returned 3.6 (1.0) per cent in Q1. The value of Varma's investments was €60.9bn (€59.1bn at the beginning of the year).

“From an investor's point of view, the beginning of the year has been good. The positive trend in equities, which started at the end of the year, has continued for five months. Unfortunately, the Helsinki Stock Exchange has not yet seen a turnaround. Interest rates in the euro area are expected to fall, which will soon bring relief to the Finnish economy,” Varma CEO, Risto Murto, said.

Of Varma's investments, equity investments returned 5.3 (2.0) per cent, while the return on US equities reached 11.4 per cent. Hedge funds returned 3.9 per cent (-1.1 per cent), private equity 3.0 per cent (0.7 per cent) and fixed income 1.0 per cent (1.2 per cent). Real estate investments returned -0.7 per cent (-0.8 per cent).

“The weighting of equities in the portfolio was increased towards the end of the year and the returns from equity investments have strengthened our already strong solvency position. The international economy is currently characterised by the attraction of the US relative to others. Europe is preparing for a fall in interest rates, but there is no similar downward pressure in the US. Interest rates are starting to diverge," Varma head of investments, Markus Aho, said.

At the end of March, Varma's solvency ratio was 132.2 per cent (130.4 per cent at the beginning of the year) and its solvency capital was €15.1bn (€14.0bn at the beginning of the year). Solvency capital was 1.6 times (1.6 times at the beginning of the year) above the solvency margin.

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