Portfolio

Basic allocation

According to the directive issued by the Ministry of Finance, the State Pension Fund must comply with the following restrictions: fixed-income instruments must account for a minimum of 30 per cent and liquid and low-risk fixed-income instruments for minimum of 20 per cent of the market capitalisation of the portfolio, while equities may not exceed 60 per cent and other investments 15 per cent of the market capitalisation of the portfolio at the time when the investment decision is made.

VER’s investments fall into four categories: fixed-income instruments, equities, position management and illiquid investments. Position management includes currency hedging and other derivative operations as well as investments in hedge funds. Illiquid investments refer to investments in property, private equity, infrastructure and private credit funds.

While the fixed-income instruments and equities in the portfolio can be purchased and sold at will, the liquidity of the equity interests in the category of illiquid investments is partly limited.

When the distribution of investments is determined, due account is taken of the derivative contracts made. The determination is made in accordance with the FSA regulation regarding the distribution of risk as applicable.

Value and return of the investment portfolio

Investment success is evaluated over a long period of time in terms of the entire portfolio.  For fixed income and equity portfolios, investment performance is monitored separately using benchmark indexes. Relative returns are measured by comparing returns against benchmark indexes defined in the investment plan. 

VER applies the international GIPS standard for calculating returns, which aims to harmonise the methodologies used in return and risk management contexts to make the return and risk figures comparable.