Finland’s Keva, which is responsible for the funding of local government pensions, made a return of 3.7 per cent in the first quarter of 2024, equivalent to €2.4bn.

Publishing its interim results, Keva revealed its investments had a market value of €67.7bn, compared to €62.5bn a year earlier.

Of the different asset classes, listed equities generated a return of 6.5 per cent, hedge funds 5.1 per cent and private equity investments 2.5 per cent. Fixed-income investments generated a return of 1 per cent and real estate investments (including real estate funds) 0.2 per cent.

Commenting, Keva CEO, Jaakko Kiander, said the year began on a fairly strong note in the capital markets.

“Nor has geopolitical unrest had hardly impact on the markets. In addition, equity markets in particular have been supported by expectations that key central banks will cut interest rates. Nevertheless, the economic outlook remains uncertain, especially in Europe,” Kiander said.

In the allocation of Keva’s total investment assets (including the impact of derivatives), listed equities and equity funds accounted for 38.1 per cent and fixed interest investments for 26.4 per cent. Of the other asset classes, private equity investments accounted for 19.1 per cent, hedge funds for 6.9 per cent and real estate investments for 6.7 per cent.

In addition, Keva’s long-term return on investments has been positive. The cumulative capital-weighted real return on investments since funding began in 1988 to 31 March 2024 was 3.8 per cent, per year. The average real return, excluding capital weighting, over the same period was 4.9 per cent. Keva’s real return, excluding capital weighting, has been 2.4 per cent over the past five years and 3.8 per cent over the past 10 years.

Keva CIO, Ari Huotari, said that despite expectations directed at central banks, interest rate cuts are still nothing more than expectations.

“Of course, interest rate cuts are likely during the course of the year, but central banks have their eyes firmly on inflation developments. On top of which, changes in the geopolitical situation may also trigger major surprises in the capital market situation,” he said.

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