Press Release 24th October 2013

Press release 24 October 2013

Healthy 4.1 per cent return on investment for the State Pension Fund (VER)

The return on investment of the State Pension Fund (VER) for the period from 1 January to 30 September 2013 was 4.1 per cent, while the corresponding figure for the whole of 2012 was 11.3 per cent. VER’s ten-year average annual return is 5.7 per cent.

The market value of VER’s investments was 16.0 billion euros at the end of September (15.4 billion euros on 31 December 2012). VER investments comprised fixed income investments of 50.7 (54.6) per cent, equities of 41.3 (38.4) per cent, and other investments of 8.0 (7.0) per cent.

The return on fixed-income investments was -1.7 per cent and the return on stock investments was 12.8 per cent. Other investments achieved a 2.6 per cent return.

The development in returns has been good at the beginning of the year. In recent months, the markets have been steered by the United States’ monetary policy. The rise in interest rates has remained moderate despite the improved economic outlook. Returns from the equity market have been excellent in Finland and the other Nordic countries. Meanwhile, emerging markets and their currencies have been caught in the crossfire, but now the situation seems to have stabilised somewhat. Due to the slightly improved economic situation, the markets have endured the constant state of tension in US politics, says Managing Director Timo Löyttyniemi.

The estimated pension contribution return for January to September 2013 is approximately 1.2 billion euros. The accumulation is roughly the same as the corresponding figure from the previous year.

A total of 1.3 billion euros of VER assets had been transferred to the state budget by the end of September. The corresponding figure for the previous year was 1.2 billion euros.

Market situation

The development of the global economy was underwhelming at the beginning of the year. The eurozone recovered from its recession during the second quarter and confidence indicators are predicting that growth will continue. In the United States and Japan, growth has continued over the entire period. China’s economy also picked up during the summer after experiencing underwhelming growth at the beginning of the year. Central banks have abided by a reviving monetary policy and even the United States has so far taken no measures to restrict this. However, uncertainty in the market grew in September as negotiations regarding the state budget and raising the debt ceiling stalled in the United States.

Fixed income investments

The return on fixed income investments was -1.7 per cent, while the corresponding figure for the whole of 2012 was 8.8 per cent.

Fixed income returns ended up negative, even though the third quarter of the year yielded a positive result. This was due to the increase in interest in May-June. High-yield and Investment Grade yielded the highest returns over the period.

Quoted equity investments

The return on equity investments was 12.8 per cent, while the corresponding figure for the whole of 2012 was 16.8 per cent.

Equities recovered during the third quarter after a weak second quarter. Investors started to take more risks during the summer and global stock markets rose across the board, especially in September. The returns from Helsinki Stock Exchange were exceptionally good in September, largely due to Nokia’s strong growth. VER’s equity investments in the Nordic countries and Japan yielded the highest returns over the year, while emerging markets yielded the lowest returns.

Other investments

Return on other investments was 2.6 per cent, while the corresponding figure for the whole of 2012 was 3.5 per cent.

Of other investments, the best returns were yielded by Private Credit funds investing in debt as well as Private Equity funds. Private Equity funds in particular benefited from the recovery of the stock market over the summer.

For further details, please contact:

Managing Director Timo Löyttyniemi, tel. +358 9 2515 7010, mobile +358 50 336 2094

The State Pension Fund (VER) is a fund external to the state budget, established in 1990, whose proceeds the Finnish state uses to prepare for the financing of future pension liabilities and the balancing of pension costs. VER is an investment organisation. The function of VER is long-term management of the assets that are entrusted to it with a view to ensuring the security, returns and liquidity of investments and their appropriate diversity and diversification.

www.ver.fi

VER KEY FIGURES

The figures in this release have not been audited.