The Swiss pension fund investment push in foreign equities is not pulling its weight in terms of returns, according to Gioacchino Puglia, investment consultant at Watson Wyatt, Geneva.
Commenting on the company's publication of performance comparisons between small and mid-sized Swiss pension fund universes, holding between SFr20m ($13.4m) and SFr1bn, Puglia says: The assets from these funds being put into foreign equities has been greatly increasing, which is good for long term diversification. If you look at the returns for last year, Swiss equities and bonds have performed extremely well, and fund managers are asking themselves if foreign investment is the best road to follow."
The figures show annual average returns for Swiss equities at 57.9%, with average Swiss bond returns of 5.6%. These compare to an overall average return in foreign equities of 23.4%, although the US average did stand at 40.9%, with average foreign bond return of 7.0% over the year.
The report's annual comparison of the two different Swiss pension fund universes, the consolidated portfolio universe and the LPP Balanced Mandate universe, found their median returns strikingly similar 16.7% and 16% respectively.
These compared favourably though against the annual figures for pooled balanced pension schemes. Returns were up for the year, with the best fund recording 21.2% and the average lying at 15.5%."