Compenswiss, the public institution managing Switzerland’s first pillar social security funds AHV, IV and EO, returned 4.98% last year, compared with -12.85% in 2022, despite a challenging environment with geopolitical tensions and economic uncertainty, it announced today.

Last year’s positive returns were driven mainly by investments in equities and bonds, it added. As a result of the positive performance, the scheme’s total assets went up to CHF40.59bn (€42.6bn) at the end of 2023, up from CHF37.28bn at the end of 2022, it added.

Assets under management include invested capital amounting to CHF37.69bn last year, compared with CHF345.9bn in 2022, and liquid assets amounting to CHF2.90bn in 2023, compared with CHF2.68bn in 2022, the scheme said.

“Despite a difficult environment, Compenswiss was able to achieve a good performance, benefitting in particular from the positive development of its equity and bond positions denominated in Swiss francs, but also from its currency hedging strategy,” said the scheme’s director, Eric Breval.

Eric Breval at Compenswiss

Eric Breval at Compenswiss

He added: “The [fund’s] performance was still negative in October. It was only towards the end of the year that most asset classes recovered significantly, which led to this pleasing performance.”

Swiss pension funds’ strategies with a higher allocation to Swiss bonds, especially with longer maturities, and currency hedging, achieved better returns in 2023, also due to the appreciation of the Swiss franc against all key currencies, Oliver Kunkel, head of asset manager section and controlling at consultancy PPCmetrics, told IPE.

Net returns on assets of the AHV fund, the largest of the three, stood at 4.81% last year, up from -12.38% in 2022, for the IV fund at 4.76%  (-11.24% in 2022), and for the EO at 4.90% (-12.21% in 2022 ), it added.

The results of the three funds differ slightly from each other because they hold a different amount of liquidity. Compenswiss recorded net returns on liquidity of 1.50% last year, compared with –0.21% in 2022, it noted.

The funds have sufficient liquidity at all times to meet payout obligations, investing assets following a low risk approach, achieving returns, Compenswiss stated.

Last year, Compenswiss also decided to exclude from its pool of investments companies with revenues generated from coal-fired power plants exceeding a 15% threshold.

The reform of the Swiss first pillar pension system, approved in a referendum, secured additional income for the AHV fund, whose financial situation will remain stable for another six to seven years, it added.

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