SWITZERLAND - Swiss pension fund returns fell to -0.3% in the first half of this year, hit by severe losses in the global equity and bond markets, according to the ASIP industry association.
The latest figure follows a +13% return in 2005.
The funds were only boosted by good returns of 3.4% from Swiss equities, which make up about 14% of pension fund assets. Foreign currency bonds performed worst with a loss of 4.2%, the analysis prepared in collaboration with Watson Wyatt shows.
Swiss pension funds tend to have quite a traditional asset allocation with stocks and equities account for around 80% of the total pension fund assets.
The other 20% are invested in real estate, hedge funds, private equity and other asset classes. In an average pension fund portfolio alternative asset classes take up under 7%, Bert Zaugg of Watson Wyatt told IPE.
But he didn't see the returns having any immediate effect on portfolios. In the long-term, however, alternative asset classes will become more important. The trend is moving from hedge funds to private equity, non-Swiss real estate and commodities.
"As consultants we think it is very important for the companies to further diversify their portfolios which are still very much equity and bond dominated," Zaugg says.
According to him, Swiss pension funds are more willing to look to alternative asset classes than, for example, their German counterparts. "Swiss pension funds could be compared with those in the Netherlands, where a lot is being invested in private equity and commodities."