The CPV/CAP Pensionskasse, the CHF11.88bn (€12bn) pension fund for the Swiss retail and wholesale company Coop-Gruppe, has wound up an Asia equities mandate as it realigned portfolios to cut asset management costs, the scheme said in its 2023 financial statement.

The pension fund has reinvested the liquidity received from the liquidation of the mandate in an existing passive equity mandate with a global focus, it added.

At the same time, an externally managed, passive mandate for investments in Swiss equities was integrated into an internally managed mandate, to reduce asset management costs, the scheme said. 

The two portfolios had a very similar structure, which is why they were merged, the pension fund explained.

Custody and administration costs for emerging markets equities tend to be higher than for developed market equities, according to staff at Complementa.

Over the past 10 years, the MSCI Emerging Markets have shown a significantly lower return than the MSCI World, with higher volatility, Complementa said in a paper comparing the performance of emerging and developed market equities. 

As at the end of 2023, the CPV/CAP pension fund invested 19.4% of total assets under management in foreign equities and 7.1% in Swiss equities, close to the strategic target allocation of 20% and 7%, figures show.  

The scheme had 26.3% of assets under management in foreign and Swiss bonds, 25.2% in domestic real estate, 4.6% in foreign real estate, 2.3% in infrastructure, 9.6% in alternatives, and 5.5% liquidity, according to its report.

It took advantage of rising inflation last year to reduce its exposure to inflation-linked bonds, partially liquidating the mandate to realign the portfolio to the strategic target, it said.

Driven by the performance of foreign equities (+11.8%), CPV/CAP returned 5.1% last year, exceeding the long-term target return of 2.8%, it said.

The pension fund did not respond to a request for comment.