European/US listed equities standout performers for Varma

Written by Adam Cadle

02/05/2023

Varma’s return on its investments in January-March was 1%, compared to -1.9% a year earlier, with European and US listed equities performing best.

The value of Varma’s investments was €56.6bn on 1 January compared to €56.2bn year earlier.

Listed equities recovered from the negative development observed in 2022 and returned 2.9% (-7.5%). US equities experienced the strongest development, with a return of 4.7%.

The return on fixed income investments was 1.2% (-2.7%), private equity investments 0.7% (5.5%). Real estate investments -0.8% (2.0%) and hedge funds -1.1% (2.1%).

“The first quarter was characterised by successfully overcoming the sudden risk factors, such as the problems in the banking sector, for the foreseeable future. The authorities and central banks in the USA and Switzerland took quick action to stem deposit runs and secure the liquidity of banks. Varma did not have any major direct investments in the distressed banks, and we were thus not exposed to risks beyond normal market reactions,” Varma chief investment officer, Markus Aho, said.

“The markets are expecting interest rates to fall during the rest of the year, and inflation peaks are also probably behind us. It will take time for inflation to stabilise at the target level, and there are question marks hanging over how starkly the economy will weaken. Of Varma’s investments, fixed income investments performed reasonably well in the first quarter after years of zero interest rates,” Aho added.

Varma’s solvency ratio was 129.6% on 1 January compared to 130.5% the prior year.

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