SWITZERLAND - Pension funds returned 4.2% in 2004, a result that was labelled "barely acceptable" by the Swiss Association of Pension Funds (ASIP).
“The situation for the pension funds remains strained due to the low level of market fluctuations reserves,” ASIP said in its semi-annual assessment of 71 pension funds with CHF131bn (e84.5bn) AUM. ASIP’s managing director is Hanspeter Konrad (pictured).
Equity allocations made positive returns last year, with Swiss shares returning 6.3% and 5.4% for foreign shares, and pension funds achieved benchmark returns before costs. However, 75% of pension funds that participated in the study reported that Swiss bond performance was below benchmark, with many institutional reducing the term to maturity of bond allocations. Foreign currency bonds returned 1.7%, attributed mainly to the fall in the vaule of the US dollar.
“If interest rates remain steady at the current level, the funds face a dilemma: either continue with their current strategy or seek other investment opportunities,” ASIP said.
ASIP also reported average hedge fund allocations of 2.1%, the first time that the allocation was measured.
“Following the very poor results of the year 2000 to 2002 period and the encouraging year 2003, a barely acceptable median performance of 4.2% was achieved in 2004,” ASIP concluded.
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