Basel pension fund raises equity, CHF bond allocations for 2025

Pensionskasse Basel-Stadt (PKBS), the CHF15.9bn (€17bn) pension fund for the Swiss city of Basel, has adjusted its strategic asset allocation for 2025, increasing exposure to equities and Swiss franc-denominated bonds.

According to its 2024 financial statement, the pension fund has raised allocations to Swiss franc-denominated bonds and foreign equities by 0.5 percentage points each, to 13% and 20% of total assets under management, respectively.

The shift is partially funded by a 1 percentage point reduction in its allocation to foreign real estate, now at 4%.

The allocation changes follow the appointment of new asset managers for PKBS’s CHF5bn equity mandates across Swiss, developed, and emerging markets. The mandates awarded to Pictet Asset Management and Legal & General Investment Management in December became active in January.

The strategy update reflects a strong performance year for both equities and bonds. Equities contributed 4.9 percentage points to PKBS’s overall return of 7.26% in 2024, with foreign equities outperforming domestic holdings.

Gold was the second-largest performance driver, contributing 1 percentage point, followed by bonds. Foreign real estate and insurance-linked securities (ILS) detracted from performance.

In response, PKBS is exiting its ILS holdings, reallocating capital to conventional fixed income and domestic real estate. The scheme still held 0.8% of assets in ILS at year-end 2024.

The pension fund’s funding ratio improved from 102.4% in 2023 to 109% in 2024.

PKBS’s decision to increase its bond exposure contrasts with the broader trend among Swiss pension funds. According to consultancy Complementa’s latest risk check-up study, allocations to liquidity and fixed income across Swiss schemes fell from 36.3% in 2023 to 34.6% last year, driven by declining yields on CHF bonds.

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