SWITZERLAND - Swiss pensionskassen believe the main causes of the financial crisis were a lack of appropriate regulation as well as excessive risks taken by the financial sector, among banks as well as managers of alternative asset classes such as private equity and hedge funds.

Through its latest survey of 131 mainly large Swiss pensionskassen, which have combined assets under management of CHF167.7bn (€110.7bn), consultants Lusenti found a certain "disillusionment" by the funds with alternative asset classes.

While most pensionskassen said they do not see much positive effect in changing the asset allocation in the short run in the wake of the crisis, many nevertheless noted they may yet reduce their exposure slightly to hedge funds and private equity.

In turn, Lusenti noted there was a tendency towards more passive mandates, as well as a possible slight increase in domestic real estate exposure.

In general, the funds agreed neither a short-term change of the strategic asset allocation nor the sacking of managers would provide a solution to current levels of underfunding.

Instead, Pensionskassen will review their tactical asset management processes and increase the use of hedging measures for equities, currencies and interest rates.

The surveyed funds agreed pension cuts were not the way to solve financial problems, but instead said they would like to limit recovery measures to active members of the funds and see employers contribute more to the pensionskassen to fill funding gaps.

Another measure taken by the funds will include a reduction of the discount rate while the pensionskassen noted a further reduction of the conversion rate beyond the already proposed reform might not be as effective. (See earlier IPE-article: The winter of Swiss discontent?)

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