Due to good performing financial markets, 1998 was a successful year for most Swiss pension funds. Average returns overall might have reached 8%, twice the the legal minimum required from funds.
In the absence of universal figures for pension funds, the fund results of the KGAST, an association of 17 in-vestment trusts dedicated to pension schemes, are used as a proxy indicator of fund performance . In 1998, their balanced portfolios had an average return of 8.5%, excluding real estate.
But the average figures, tell even less about what happened last year, be-cause of the high volatility in the market. This hit AST, the anlagenstiftung managed by UBS Brinson in Switzerland, which had a luckless year. Its Swiss equity fund had a return of 8%, while the Swiss Market Index (SMI) advanced 14.3% - a remarkable underperformance for a blue chip portfolio. It was well outside the range of its competitors, who had an average return of 15.3%.
In the small and mid-cap funds sector, AST lies almost 11 percentage points behind the benchmark. The underperformance is attributed to poor stockpicking.
AST is of particular importance in the market. After its merger with the corresponding organisation of UBS, the former SBC Warburg trust, it will be the market leader with Sfr16bn (E10bn) under management. But there has been the dampening effect of low performance and low cash inflow, which meant that total AST assets grew by 5% in 1998, compared with an average of 20% for the leading eight competitors. AST has not changed its investment approach for 1999 and produced a negative return of 1%, compared with -0.6% for the average in the first quarter. Eric Solenthaler
p Swiss pension fund performance figures for 1998 from Zurich-based Intersec Research show 26% of portfolios outperforming the Intersec in-dex, based on the performance of 15 institutional managers and covering Sfr25bn in pension assets. The index measures against the average asset allocation of every portfolio in the OPP2 SwissPerf comparison universe.
By the end of 1998 the Intersec in-dex had risen 10.1%, with the best performing comparison portfolio rising by 12.9%, and the worst by 5%. The median portfolio produced re-turns of 8.7%.