Assets under management at Finland’s Elo Mutual Pension Insurance reached EUR 30.91bn in the first quarter of this year, up from EUR 30.0bn at the end of 2023.

“Elo’s year started strongly with good investment returns, driven by equity investments,” says Elo’s CEO Carl Pettersson in a statement.

The return on the portfolio totaled 3.3% for the first quarter and the best performers were listed equities and hedge funds.

Listed equities made up 32.3% of Elo’s investments and pulled in a return of 7.0% in the first quarter. 

“Equity market returns were supported by expectations of monetary policy easing and, especially in the US, a significant strengthening of the profit growth expectations of technology companies,” Elo states and adds that equity market returns were characterized by geographical divergence. 

“The European, Japanese and US markets performed excellently, while the returns were more modest in China and negative in Finland.”

Hedge funds and private equity

The second-best performer in the portfolio was hedge funds, which make up 9.5% of all investments and yielded a return of 6.5%. 

Elo’s private equity investments, which made up 17.1% of all investments, generated a return of 2.3%. Unlisted equity investments made up 2.1% of the portfolio and yielded a return of 0.4%. 

Bonds made up 24% of Elo’s investments at the end of Q1 and yielded a return of 0.6%.

“Market interest rates rose from the end of last year, as investors re-priced the expectations of lowering key interest rates. The persistence of inflation and the strength of economic data postponed the expected start date and scale of interest rate cuts. This was reflected in negative bond market returns,” the company explains.

A later recovery for real estate

Real estate investments, which make up 12.7% of Elo’s investments, pulled in a return of 0.0%.

A recovery in the real estate investment market is now not expected until the end of the year, Elo writes.

“The risks of Elo’s real estate portfolio have been effectively distributed, and the long-term outlook is good,” it adds.

Most of the company’s real estate portfolio and 8.5% of all investments are invested in direct real estate, which yielded 1%, whereas real estate funds and joint investment companies make up some 4.3% of all investments and reported a negative performance of -1.9% in Q1.