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Swiss pension fund to review 'fundamentals', real estate investments

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Swiss pension fund Stiftung Abendrot has said it plans to review its investment strategy in the coming months.

In a newsletter to members, the CHF1.3bn (€1.06bn) collective scheme said it wanted to determine whether its current asset allocation had to be adjusted to account for “economic developments”.

The Stiftung Abendrot is to consider, among other things, whether stock markets are “already overheated”, as well as what to do about the impact of rising interest rates on fixed income holdings.

As one of its “major challenges”, the pension fund cited a possible need to re-arrange its real estate portfolio, adding that it was already “well on the way” to increasing its exposure to the asset class.

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“In reviewing the investment strategy,” it said, “we are also interested to see whether we can achieve additional returns – without adding any major additional risks – by small shifts in the weighting of the individual asset classes.”

As per year-end 2013, the pension fund had just over one-third of its assets in fixed income, almost 25% in equities and another quarter in real estate.

The rest was invested in liquidity and mortgages, with no exposure to alternative investments.

The Stiftung Abendrot, a member of the Ethos foundation, is committed to socially responsible investment.

In 2013, the pension fund returned 6.34%, in-line with the Swiss average.

However, the net return was slightly lower at 5.5%, with the Stiftung Abendrot citing approximately CHF10m in real estate investments “not yet generating profits”.

For the first half of 2014, the pension fund reported a return of around 3%, 100 basis points below the Swiss average.

However, the scheme managed to achieve a funding level of 109.9%. 

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