ASIP finds median performance at 1.8%
SWITZERLAND - The Swiss pension fund association ASIP has calculated pensionskassen achieved a median performance of 1.8% in 2007, with emerging markets equity and real estate contributing most positively.
Returns of 74 pensionskassen, which have combined assets of CHF176bn (€109bn), ranged from between -0.6% and 4%, according to the largest independent pension fund survey in Switzerland, conducted by ASIP.
"The deviation is not surprising looking at the very diverse allocation," ASIP noted.
Exposure to obligations ranged from allocations of 10% to 45% by the end of last year, similar to that of overseas equities.
"The results show it is the asset allocation, chosen by the manager according to the risk tolerance of the fund, which is crucial in the end," the association explained.
The median performance of the funds surveyed was at 9.9% after the first six months of 2007 but it later suffered as a result of "massive corrections primarily in the equity markets in developed countries".
According to ASIP, one of the major factors which contributed positively to the performance of Swiss pensionskassen was emerging market equities.
While the median performance in developed markets was a negative return of -6.1%, investments of Swiss pension funds in emerging markets saw assets values rise 7.8%.
Bonds profited from sinking interest rates in the second half of the year but domestic debt "could not recover fully from the losses suffered in the first half" and ended the year with a negative return of -0.4%.
Real estate investments also returned 5.6% on average while hedge funds only made a small contribution with a median result of 1.1% as "they suffered similar losses to equities in the second half of the year".
Other surveys had calculated performances between 0.66% and 2.04% depending on whether or not domestic real estate holdings were included. (See earlier IPE story: Swiss funds saved by direct real estate)
ASIP noted the annualized three and five-year performance of funds was 6.6% and 6.9% respectively.
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