Interest rates rattle Swiss funds, report says
SWITZERLAND - Swiss pension funds’ confidence has slumped, bashed by the latest developments in global interest rates, says asset manager Bearbull Gestion Institutionelle.
Bearbull says in a report that the relative optimism of the first quarter faltered in the second period. The report says more and more Swiss pension funds believe it will be difficult to hit their annual targets with higher interest rates.
Bearbull monitors the confidence of pension funds, through the CIP Index - or Indice de Confiance des Institutions de Prevoyance.
According to the index, confidence has gone down to 106.5, 2.88 points lower than the first quarter 2004.
“Such a fall means that pension funds have significantly reviewed their expectations for the current year,” the report says.
Bearbull claims that ‘corrections’ in the bond markets and the decline in equities markets have been catalysts for the change of heart seen between the first and second quarters.
Swiss equities, which have recorded a 1.67% increase, have been the only exception in a class recording ‘negative performance’.
In a matter of few weeks, the domestic and international bond markets, respectively down by 1.94% and 4.44%, will have wiped out the increase of the first quarter.
But “this brutal change of tendency” will have to be confirmed in the next months, Bearbull says.
“Current uncertainties on the behaviour of the markets in the second half of the year weights on the confidence of pension funds, which find themselves at the same levels of 2003,” the report adds.
Bearbull Gestion Institutionelle is a sister company of Bearbull, which is owned by the Belgian private bank Degroot.