Finnish pension company Keva, which is responsible for the funding of local government pensions and the investment of pension funds, reported a return on investments of -7 per cent in 2022.

This equates to investment losses of around €4.6bn.

Keva’s best performing asset class was hedged funds, which returned 6.1 per cent, followed by private equity (3.1 per cent) and real estate (2.7 per cent).

On the other end of the scale, Keva’s listed equity investments returned -11.4 per cent and its fixed income investments returned -11.3 per cent.

In total, Keva’s investment assets had a market value of €62.2bn at the end of 2022.

Of this, listed equities accounted for 31.3 per cent of the portfolio, while listed equities made up 21.8 per cent, private equity accounted for 18.6 per cent, real estate made up 7.6 per cent and hedge funds accounted for 7.2 per cent.

“Russia’s invasion of Ukraine a year ago triggered global inflation, which resulted in the end of a long era of loose monetary policy,” commented Keva CEO, Jaakko Kiander.

“With inflation came rising interest rates, which in turn led to a decrease in all asset values. This was also reflected in Keva’s investment performance.”

Keva CIO, Ari Huotari, added: “The year was historically bad on both the equity and fixed income markets at the same time.

“Cause for investor comfort was in short supply. Nor am I convinced that this storm has yet passed.

“At the same time, it’s important to remember that, by nature of their mission, pension investors are long-horizon investors.

“Individual years or periods of a few years do not derail us from performing our mission, i.e. long-term intergenerational fairness in pension funding.”

The pension company’s cumulative capital-weighted real return on investments since funding began in 1988 to the end of 2022 was 3.7 per cent a year.

The average real return, excluding capital weighting, over the same period was 4.9 per cent, while its five-year real return was 1.3 per cent and its 10-year real return was 3.9 per cent.

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