Ilmarinen Mutual Pension Insurance Co., Helsinki, returned -6.6% on its investments in 2022 due to falls in equity and fixed income markets, it said in a financial update Thursday.
The investment return in 2021 was 15.3%. The long-term average annualized return on investments since 1997 was 5.7%.
Assets fell 7.4% in 2022 to €56.3 billion ($60.1 billion) as of Dec. 31.
"Accelerating inflation, tightening monetary policy and concerns over economic growth depressed the investment markets, and performance was broadly negative during the year," Mikko Mursula, deputy CEO and CIO, said in a news release accompanying the update.
Most equity indexes fell by 10% to 20%, while "returns on fixed income investment were historically weak due to rising interest rates and credit risk margins," Mr. Mursula added.
Ilmarinen's equity investments lost 10.2% in 2022 vs. a 28% gain a year earlier.
Fixed income investments returned -5.2% in 2022 vs. -3.9% in 2021, while real estate investments returned 1.3% compared to a 8.8% return a year earlier.
Ilmarinen's commodity investments, absolute return funds and currency lost 1.1% compared to a loss of 2% in 2021. Ilmarinen invests 47% of its assets in equities, 30% in fixed income, 12% in real estate and 11% in commodity investments, absolute return funds and currency.
The pension fund's climate policy, which aims to achieve a net-zero portfolio by 2035, was implemented across listed equity, Finnish real estate, corporate bonds and overseas real estate allocations in 2022.