Annual Report 2014


Equity investments yielded good returns

Equity investments performed the best of all asset classes. They accounted for 41 (39) per cent of Varma’s investments and yielded a return of 9.1 (21.8) per cent.

Equity investments consisted of listed equities (32%), private equity investments (6%) and unlisted equities (3%). Equity investments have had a very strong six-year period, with an average return of 13.3 per cent.


Share prices climbed until June, but towards the end of the year there was a considerable increase in volatility in the equity markets. The overall return on listed equities was good, at 7.4 per cent. The highest return was generated by U.S. equities, at 16.3 per cent. The equities of Sampo Corporation, Varma’s largest domestic holding, performed very strongly, at 14.0 per cent. The crisis in Russia pushed down the share prices of certain key holdings, and the total return on Finnish equities was 6.7 per cent.

Finnish equities account for 33.8 per cent of Varma’s listed equities.

Finnish equities accounted for 34 per cent of Varma’s listed equities. European equities accounted for 26 per cent, U.S. equities for 29 per cent and emerging markets for 11 per cent. To counterbalance the high share of domestic equities, Varma has broadly diversified its portfolio outside of Finland, not only in international equities, but also in private equity investments, hedge funds and corporate bonds.


Superb year for private equity investments and unlisted equities

Private equity investments and unlisted equities also generated good returns. Private equity investments yielded a return of 13.5 (12.1) and unlisted equities 19.7 (26.7) per cent.

About half of Varma’s private equity investments are invested in the U.S., and the rest mainly in Europe and the Nordic countries. The value of these investments developed strongly in all these areas. Private equity funds exploited the strong demand and liquidated large amounts of their investments. Infrastructure funds included in the portfolio also yielded a strong return.

The return on unlisted equities was improved by the selling of Fingrid Oyj’s shares, the good development in the value of private equity co-investments, and the considerable dividend income received from the housing real-estate companies SATO Corporation and VVO Group and the increase in the value of their shares.

Private equity and unlisted equities represent a long-term asset class, and their long-term return has been very good.