As real as it gets
The Swiss performance measurement market benefits from a number of theoretical indices and universe comparisons developed to satisfy statistical needs.
The first, the LPP index developed by Swiss asset management company Pictet in 1985 measures the average of all portfolio allocations theoretically possible under Swiss regulations in increments of 5%. These are recalculated monthly and widely used by many Swiss funds for their simplicity in gaining a benchmark comparison. Pictet offers a similar index in Austria, known as the Austrian Pension Plan Index (APPI), characterised diferently by lower weightings in what is a traditionally more conservative market.
Further indexes have sprung up in demand for a more realistic" comparison scale, according to Olivier Ferrari of Coninco, which produces in association with Micropal an index of five variants, with the lowest holding only 10% in Swiss equities and the highest showing a legal 50% maximum (30% Swiss equities, 20% foreign equities).
Ferrari says:" The LPP is fine for comparing an unrealistic average fund with 26% in stocks, but we can offer more flexible comparisons for those with 20% or 40% in stocks."
This index is sent out to around 550 funds and "widely used", Ferrari says.
Intersec also produces an index for balanced funds using the same sub indices as the Pictet scale, but with portfolio weightings calculated from a real fund universe.
Conrad Rossier of Intersec believes that in the short term, with funds increasing equity holding, this index is as real as it gets. "However, we could see more indices developing depending on market or legislation changes," he adds."