SWITZERLAND - Three quarters of Swiss pension funds reduced their allocation to Swiss or foreign equities between 2001 and 2004, the latest Swiss institutional survey has found.
The quarterly survey, conducted by Lusenti Partners in Nyon and sponsored by Credit Suisse Asset Management, took in 163 institutional investors with assets totalling CHF169.2bn (e109.6bn).
The survey found two thirds of Swiss pension funds modified their strategic allocation between 2001 and 2004, with 75% reducing Swiss or foreign equities and many increasing their indirect real estate investments.
The finding was consistent with the performance of the asset classes at the end of September, with indirect real estate investments generating the best results (4.3%) followed by direct real estate investments (3.2%), Swiss equities (2.9%) and foreign equities. Alternative investments fared worse (1.2%) than foreign currency and Swiss franc denominated bonds.
“The results at end-September are only marginally better than the minimum interest rate (2.25%), which applied in 2004 under the Swiss Federal Law on Occupational Retirement, Survivors’ and Disability Pension Funds (BVG/LLP) and global performance did not enhance the financial equilibrium of the pension institutions,” the report noted.
“The favourable fourth quarter will, on average, enable the institutions to achieve a total performance of 3%, 3.5% or 4% for the full year.”
The survey found that in terms of financing, a rise in employee and employer contributions went a long way towards stabilising the funds. Other stabilisation measures included a reduction of the pension conversion rate, the abolishment of inflation-linked adjustments and the reduction of target benefits.
Survey participants included pension funds, joint and collective foundations and health insurance schemes.
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