SWITZERLAND - The CHF305m (US$269.1m) BVG-Stiftung der Marti-Unternehmungen - the Swiss construction firm's pension fund - has decided not to move from mandates to investment foundations and will instead switch existing mandates from active to passive management, MandateWire reports.
Head of Investments Urs Affolter told MandateWire the fund eventually decided that investment foundations did not represent a viable alternative to mandates, having previously identified them as a possible option for the future.
"We said we want to match the index as closely as possible," he said, while at present all mandates are actively managed. The change will probably be implemented in May.
The decision against investment foundations came because of performance and lack of control: "Especially last year it turned out that some Anlagestiftungen were quite far away from the index, for example with bonds you saw quite startling results," Mr Affolter said, "there were huge differences between [providers], and we had to say there are risks in there we don't know about".
The scheme's sister fund, the CHF120m Personalvorsorgestiftung der Marti-Unternehmungen, invests mainly with Anlagestiftungen.
In their portfolios both schemes rely heavily on direct domestic property, the BVG-Stiftung targeting 43% and the Personalvorsorgestiftung 55%. Asked if the law's new limit of 30% for property - introduced in January - would have an influence on the stakes, Mr Affolter replied: "We went through it with the supervisor - with a professional justification one can differ from that limit."
"My idea is that a large portion of the fund should bring stable returns, and with a smaller portion you can try to get something extra." He said the BVG scheme was funded 100.6% thanks to its property assets; the smaller fund is 112% funded.
Despite a current net profit of 4.8% on property, the asset class also brings problems: "It's quite hard to have the structure you want," as the Swiss market is very saturated, and the fund's policy is to buy only residential property. Going into indirect or overseas real estate has however been dismissed as an option: "We need to pay our pensions in Swiss francs, we depend on the economy in Switzerland, so we don't want to take on risks we can't check - with international property it's very difficult to know the markets, and with indirect investments it's a bit unclear how the objects are valued."
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