SWITZERLAND - Swiss pension fund lobby ASIP says its members finished 2006 with an average return of 6.9% - slightly higher than a previously reported 6.6% for the Credit Suisse Pension Fund (CSPF) index.
ASIP said the "satisfying return" for 2006 was due mostly to the good performance of its members' equity and real estate investments.
ASIP-represented schemes earned 20.1% on Swiss equities last year, missing the relevant benchmark by 0.6%. But at 11.2%, their return on foreign equities was 0.2% above the benchmark.
The schemes earned nothing on their investments in Swiss bonds and just 1% on foreign ones. Still, the returns were above the benchmarks of -0.1% for Swiss bonds and -1.9% for foreign bonds.
The 6.9% return reported by ASIP today contrasts with the 6.6% figure calculated at the end of January for the CSPF index. Credit Suisse noted that the second quarter of 2006 - which saw a sell-off on equity markets - dampened the schemes' return for the full year.
Regarding its members' asset allocation, ASIP said they had around 40% allocated to equities, including 26% to foreign stocks and 14% to Swiss. The funds also had 41% invested in fixed income, including 24.4% in Swiss bonds and 16.3% in foreign.
Real estate made up 8% of schemes' portfolios, followed by hedge funds (2.8%), other alternatives like private equity and commodities (5.3%) and cash (3.4%).
"The asset allocation shows that Swiss pension funds are adhering to a long-term orientated investment strategy," said ASIP.
In a related development, the CHF16.5bn (€10.1bn) pension fund for Swiss retailer Migros said its return was 5.9% for 2006. The figure is below both the ASIP average and the 10.7% earned by the scheme in 2005.
Migros' pension fund also said its funding ratio slipped 1.7% to total 115.9% at the end of 2006.
Breaking down its investments, the scheme said it had around 44% in fixed income, 33% in equities and 23% in real estate.
The fund, which is defined contribution in nature, added that it has 55,800 contributing members and 25,300 pensioners.