Pension fund Ilmarinen may trim Finnish equities in long term

HELSINKI, April 23 Tue Apr 23, 2013 11:34am EDT

HELSINKI, April 23 (Reuters) - Finnish mutual pension insurance company Ilmarinen may further cut investments in domestic companies, building on a recent shift towards overseas equities including emerging markets, a senior executive said.

Ilmarinen, which has 30.4 billion euros ($39.6 billion) in investments, holds over 30 percent of its investment in listed equities.

Within equities, around 30 percent is in Finnish companies, compared with about 40 percent two years ago, but Deputy Chief Executive and head of investments, Timo Ritakallio, said Ilmarinen would probably cut that further to maintain solid returns.

"In the long run, it still may be too high," Ritakallio told Reuters in an interview.

Ilmarinen's top investments in Finland include Pohjola Bank , utility Fortum, lift maker Kone and Nokia.

Ritakallio said he expected Ilmarinen to maintain around 30 percent of its investment in listed equities, but to shift the weighting towards emerging markets and other areas outside Finland.

He also said it would aim to increase the weighting of private equity, currently 4.6 percent of all investments, to around 6 percent in the long term.

"If you consider the slow growth environment in Europe as well as a low interest rate environment, many of the trends - maybe most of them - are not positive for investment returns," he said. "But at the same time, for the next 2-3 years, if you look at the global economy, the growth picture is quite attractive."

Finland is one of the euro zone's healthiest economies but its growth has been hit by weak exports. With one-time export leader Nokia continuing to lose market share and few companies listing on Helsinki's bourse in recent years, economists expect weak growth ahead for the small Nordic economy.

Ilmarinen's quarterly results, announced earlier on Tuesday, showed the value of its stake in the mobile phone maker fell 27 percent to 151 million euros over the first three months of the year.

Ritakallio said that was due to both the fall in share prices and a reduced stake. ($1 = 0.7674 euros) (Reporting by Ritsuko Ando; Editing by Helen Massy-Beresford)

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