HELSINKI, Feb 17 (Reuters) - Finnish pension fund Ilmarinen has increased its investments in U.S. equities while cutting back on European stocks due to weak growth prospects in the region, its chief executive Timo Ritakallio said on Friday.
Ilmarinen, Finland’s second-biggest pension fund after Varma, oversees about 37 billion euros ($39 billion) in investments and its moves are closely followed by the region’s financial market players.
The fund said its portfolio made a total investment return of 4.8 percent last year, as it shifted its focus in equities towards the United States.
The share of European stocks in its equity portfolio fell from 46 percent to around 35 percent, while the share of U.S. stocks increased from 16 percent to around 20 percent.
Ritakallio told Reuters he still saw the U.S. market as a lucrative investment despite uncertainty over President Donald Trump’s economic policy and commitment to free trade.
“We see growth accelerating in all our central markets, except Europe, in 2017,” he said by phone.
“Trump’s actions have so far been slightly positive for the stock market ... Also, in the short term, there are companies that can benefit from protectionism and trade barriers, including Finnish companies.”
Ilmarinen plans to keep the share of stocks at around 40 percent of its portfolio, but will reduce the share of fixed-income instruments and increase real assets this year, Ritakallio said.
He added that he believed volatility would continue.
“We have three major upcoming elections in Europe, President Trump’s actions are closely monitored and the Brexit talks will start,” he said.
$1 = 0.9392 euros Reporting by Tuomas Forsell; Editing by Jussi Rosendahl and Mark Potter