SWITZERLAND - After a tough 2001 for Swiss pension funds with average losses of almost 7%, the first quarter of 2002 is looking a little better. The median manager in the InterSec Balanced Universe returned 1.1% for the first quarter of 2002.
Although the return was in positive territory it was below the InterSec Balanced Benchmark return of 1.6% and just below the Pictet BVG/LPP index return of 1.2%. The main driver of this underperformance was stock selection in foreign markets. The median manager had a return in foreign equities of –0.3% versus the MSCI World index return of +1.8%.
Not surprisingly after such a difficult year in 2001, managers made some significant changes in their asset allocation for Swiss pension funds in the first quarter of 2002.
Peter Leutenegger of InterSec Research said: “While a number of managers drastically reduced their exposure to the troublesome foreign equities asset class others actually increased their exposure. The median allocation to foreign stock markets is still around 19% but the third quartile allocation dropped from 17.8% to 16.0% since the end of 2001. Monies raised from the reduction in the foreign exposure were reallocated to domestic market equities and bonds and in cash holdings.
The median manager in the new Conservative Balanced Universe performed slightly worse, with lower equity weightings, than the entire universe. The median manager return returned +0.8% for the first quarter.
For Swiss equities, the InterSec median manager underperformed the Swiss Performance Index, through both negative stock selection and sector allocation.
As in 2001 the global equities median manager underperformed the MSCI Global Equities index for the first quarter.
InterSec Research Corporation was founded in 1975 in the US to address the information needs of the international investment management industry. In April 2000 InterSec Research Corporation became a member of the Deutsche Bank Group.
By Luke Clancy