Strong return on other investments

Other investments accounted for 20 (16) per cent of Varma’s portfolio. They consist of hedge funds (17 per cent), inflation-linked investments (2 per cent) and a relatively small commodities position. The return on other investments was good, at 8.7 (4.5) per cent.

The return on hedge fund investments was 7.8 (8.8) per cent. They performed consistently, with only minor volatility. Their share of the portfolio was increased during the year, and the strengthening of the U.S. dollar further increased their share. The return on Varma’s hedge investments has been very good over a long period, and volatility has been very low.

Inflation-linked investments include inflation-linked bonds issued by states with good creditworthiness. The return on inflation-linked investments was high, at 15.9 (-6.3) per cent. Returns were also impacted by the decline in interest rates, which improved the value of bonds with a long maturity. Changes in exchange rates also contributed to the strong return on inflation-linked investments.