SWITZERLAND - The CHF17bn (€13bn) pension scheme of the Swiss retailer Migros, MPK, returned 4% last year after having built a core-satellite portfolio.
The Migros Pensionskasse (MPK) beat its benchmark by 0.6 percentage points, an outperformance which is mainly down to "good timing" in the restructuring process and because "PIIGS were underweighted", the scheme noted in its annual report.
As announced last year, the MPK implemented core-satellite strategy, which now sees satellite portfolios in the equity, bond and real estate sector.
For the satellite bond portfolio, the fund hired PIMCO to run a US-corporates mandate, with the remainder invested in other investment-grade corporates, high yield bonds, hybrid bonds and convertibles.
In the core bond portfolio MPK introduced a 80/20 split between government bonds and corporate bonds, all with ratings above AA.
For its real estate satellites the fund, which holds CHF4bn in direct real estate, has started to invest indirectly into Swiss property as well as funds in European and Asian property.
Its satellite equity portfolio includes small and mid-caps, private equity, absolute return and commodities. For the private equity investments MPK has awarded a mandate to UBS to support the in-house team which is also managing the rest of the portfolios.
MPK-members last year agreed to plans to keep the fund as a defined benefit scheme, while changing some of the parameters such as an increase of the retirement age to 64 and increased cuts at early retirement.