SWITZERLAND - Swiss pension funds continued to reduce domestic bond and equity holdings while increasing allocations to their foreign counterparts in the first quarter of 2006.
The proportion of Swiss equities held in portfolios that make up the Credit Suisse Swiss Pension Fund Index fell for the eighth consecutive quarter, falling 0.2% in the period under review and by 2.6% over the last two years.
By contrast, the proportion of foreign equities rose by 0.6% to 18.1%, resulting in a total rise of 3.2% over the last two years.
Combined, Swiss bond and equity holdings have decreased by a total of 8.3% in two years, from 52.3% to 44%, while combined holdings of foreign equities and bonds have increased by 4.4% to 29.3%.
The index returned 2.42% in Q1, taking the index to a new high of 119.14. Swiss pension funds increased second pillar assets under management by an extrapolated CHF14bn (e9bn) to CHF590bn.
Continuing the trend away from domestic bonds, holdings fell by about 2% in Q1, or almost 6% in the last two years.
Alternative investments and real estate showed little change from the last quarter of 2005, with holdings up only slightly from 1.8% to 1.9% and down from 12.1% to 12% respectively.
“The BVG/LPP minimum rate of return rose a further 0.75 points or 0.62% during the period under review, from 121.72 to 122.47,” Credit Suisse said.
“As index growth was again significantly greater than the statutory requirement in the first quarter of 2006, the performance gap also narrowed compared with the previous quarter, fallling a further 2.06 points, or 1.8%. If the financial markets were to prove in similarly good health in the months ahead, the overall index would surpass the minimum rate of return in the third quarter for the first time since 2001.”
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