Swiss Pensionskassen with higher costs yielded stronger returns on average than cheaper peers over a three-year period, according to research from Complementa.

The Swiss consultancy found that, between 2013 and 2016, the average return of Pensionskassen with an average cost of over 0.75% was 20 basis points a year better than that of pension funds with costs below 0.25%.

In its analysis, first reported by IPE in May, Complementa found “no link between size and costs”.

“It comes down to the allocation mix,” Heinz Rothacher, CEO at Complementa Investment-Controlling, told IPE. “If pension funds hold real estate and alternative investments, the TER level is higher on average.”

He added: “Some pension funds made false economies. A good allocation mix, and in that sense a clever strategy, pays off.”

Rothacher said diversification “paid off” as adding real estate and alternatives to the mix helped increase performance.

Complementa’s risk check-up on Pensionskassen found that the average exposure to alternatives was 9.1%, an all-time high. The group said it had also experienced increased interest from trustees for training sessions on alternative investment strategies.

However, Rothacher emphasised that it still “makes sense to cut costs in the individual asset classes”.

The Complementa research showed that many pension funds were already doing just that: while the quota of cost-intensive alternative asset classes increased, the average cost level dropped slightly for the first time since 2013.

The findings contrasted with data published earlier this month by Dutch research firm The Pensions Rating Agency. It found that Dutch schemes with low costs and a focus on passive management outperformed on average in 2016.