Steady return on other investments
Other investments accounted for 17% (18%) of Varma’s portfolio.
They consist of hedge funds (16%), and a relatively small commodities position. The return on other investments was reasonably good, at 3.5% (8.4%).
Return on hedge funds 2005-2015
The return on hedge fund investments was 3.9% (7.8%). Hedge fund investments yielded a consistent return and effectively diversified the risk caused by market fluctuations in equity and fixed income investments. The strengthening of the dollar contributed to the good return. Within the portfolio, market-neutral strategies yielded the strongest returns. The environment for opportunistic strategies was more challenging, influenced especially by increasing risk awareness in the US at the end of the year. The return on Varma’s hedge investments has been very good over a long period, and volatility has been very low.
The return on commodities remained weak due to the long-standing decline in the commodities market. Energy and metal prices especially declined towards the end of the year to a remarkably low level.