SWITZERLAND - Swiss pension funds reduced their allocations to domestic bonds and equities during the first quarter of 2005 in exchange for foreign bonds and equities, according to Credit Suisse Asset Management.
Releasing the first quarter results for the CSAM Swiss Pension Fund Index, the firm said weightings to Swiss bonds reduced by 1.1% while the reduction in Swiss equities was 1.4%.
Foreign equities increased 0.8% and foreign currency bonds 0.8%, the latter on the back of a long ongoing decline which sees them back at levels reached in Q4, 2003.
Real estate was another area to increase its weighting, however only modestly, by 0.1% to 11.8%, while the proportion of mortgages rose from 2% to 2.5% - the highest level yet seen in the index.
CSAM said alternatives saw an increase of 0.3%, which more than offset the slight decline of the previous quarter, taking the category to a new high.
Assets under management of autonomous Swiss pension funds rose by CHF 12bn to about CHF 520bn in the first quarter.
CSAM said the minimum BVG/LPP rate of return since the beginning of the year now stands at 2.5% compared to 2.25% the previous year. The BVG/LPP target curve has become slightly steeper as a result, making it more challenging for pension funds to achieve their objectives in the current environment, the firm added.
The CSAM Swiss Pension Fund Index improved in the first quarter, rising 2.4 percentage points from 103.3 to 105.7.
CSAM said because the index rose significantly more than the statutory requirement in the first quarter, the performance gap also narrowed compared with the previous quarter, falling a further 1.67 percentage points from 15.46 to 13.79.
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