SWITZERLAND - The CHF1.5bn (e966m) Manor pension fund is to allocate 2% of its total assets to commodities and is also considering appointing a manager for a tactical asset allocation (TAA) overlay brief to be applied to the entire fund.
Vice president of finance Wilfred Stoecklin told Global Pensions the allocation to commodities would be worth CHF30m, and most likely invested passively through the different compartments of a benchmark such as the Dow Jones AIG index.
Funding for the allocation will be re-directed from its existing 23% allocation to Swiss bonds.
The attraction of the asset class was its low correlation with equities and bonds and diversification benefits, said Stoecklin, who added that Manor expected commodity prices to rise over the long run.
Commodity investment is currently a hot topic in Switzerland. Stoecklin said many of the large pension funds had started to examine the asset class with greater interest.
The decision whether to appoint a TAA overlay manager will be based on the outcome of an ongoing discussion about the merits of outsourcing this.
Currently the fund’s investment committee makes all tactical decisions.While the fund previously had a TAA manager for currency, this would be the first time a TAA manager had a brief for the entire fund’s assets. For the moment it remains a philosophical discussion, said Stoecklin, trained on the debate as to whether it would be a more cost effective route.
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