Finland’s Elo returns 3.6% in 2020; equivalent to €25.9bn

Finnish pension company, Elo, made a return of 3.6 per cent in 2020, equivalent to €25.9bn, it has revealed.

The solvency ratio was 123.7 per cent and the solvency capital was 1.6 times the solvency limit. Elo CEO, Satu Huber, said: “Despite the surprising market decline caused by the spring interest rate crisis, Elo's solvency has improved significantly since the spring and the solvency capital reached almost the previous year's level.”

When share prices were at their lowest level, Elo's solvency capital fell below the statutory solvency limit, which measures the risk level of investments. However, its assets clearly exceeded the company's pension liabilities at all times.

The five-year average nominal return on Elo's investments was 5.5 per cent and the real return 4.7 per cent. The 10-year average nominal return was 5.3 per cent and the real return was 4.1 per cent.

“In early 2020, the coronavirus pandemic caused a rapid and deep recession in the global economy, due to austerity measures related to virus containment. However, economic growth recovered during the summer and early autumn. So far, the Finnish economy has survived the coronavirus recession relatively well,” Huber added.

Elo's equity investments returned 4.5 per cent, fixed-income investments 2.6 per cent, real estate investments 2.2 per cent and other investments 6.0 per cent. The result of investment operations at fair value was -€30m.

It said that the best performers in the portfolio were equities in the United States, and especially in emerging markets, where results were clearly better than market returns. In Europe, market development remained negative, which was reflected in returns. Return on unlisted shares and return on private equity supported total returns.

Elo has implemented a long-term strategy in real estate investments and it said the investment portfolio is well diversified into different types of premises. The holdings are concentrated in areas and properties that are estimated to have stable demand in the long term, both domestically and internationally.

In addition, hedge fund investments included in other investments have yielded in line with the strategy and achieved their goals even in a challenging investment environment.

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