The majority of Austrian Pensionskassen have opted to increase their allocation to private markets in their 2021 strategies to fend off the consequences of a prolonged period of low interest rates, Mercer said, commenting on the pension funds’ Q1 performance figures.
Overall, multi-employer pension funds achieved a 2.01% performance figure in the first quarter of this year. Bonus Pensionskasse topped the ranking among multi-employer pension funds in Q1 with 3.63% in the dynamic category, which has the highest exposure to equities (more than 40% allocated), according to Mercer.
Bonus performed well with 1.13% in the defensive category as well, with an equity exposure of 16% or less.
The best performer in the conservative category, with an equity exposure in the range of 16-24%, was APK Pensionskasse with 1.71%. APK also ranked first in the balanced category, with an equity exposure in the range of 24-32%, and a 2.58% performance number.
Valida recorded the best performance among multi-employer pension funds with 3.44% in the active category. The equity exposure in this case was in the range of 32-40%.
“Equities are the biggest winners of the quarter,” Mercer Austria’s managing director Michaela Plank said, adding that pension funds are still largely overweight the asset class.
Provident funds – Vorsorgekassen – achieved a solid performance of 0.95% in the first quarter of 2021. The best performer among the Vorsogekassen was APK with 1.19%, by applying a conservative investment strategy with a higher share of equities.
BUAK Vorsorgekasse topped the ranking in the defensive category with 1.11%, ahead of fair-finance Vorsorgekasse with 1.07% and Valida VG2 with 1.04%.
Swiss large Pensionskassen integrate ESG
Almost half (44%) of Swiss large pension funds with assets under management above CHF500m already integrate environmental, social and corporate governance (ESG) standards in their investment strategies, according to the latest Swisscanto Pensionskassen study.
Only 14% of small pension funds integrate ESG, while 64% of the large Pensionkassen apply exclusion criteria, compared with only 29% of the small pension funds.
Overall, 25% of the 514 pension funds surveyed by Swisscanto have introduced ESG criteria in their investment strategies, compared with just 8% in 2015. A further 9% of the funds will introduce ESG standards over the next three years.
The Swisscanto Pensionskassen study this year included a survey on ESG for the first time. It highlights that on average only 17% of Pensionskassen measure CO2 emissions in their portfolio, while 6% are considering introducing such a measure.
The study also showed that 4% of Pensionskassen have a target to reduce CO2 emissions, while 11% are aconsidering introducing a measure to cut emissions.
According to the study, Swiss Pensionskassen returned on average 3.97% in 2020 compared with 10.85% in 2019. Larger pension funds with AUM exceeding CHF500m achieved higher average returns (4.02%) compared to small pension funds (3.90%).
Equity allocations rose to a record high of 32.7%, while allocation to bonds fell to a record low of 28.9%. Within a decade, the share of bonds in portfolios fell by 22%, while equities grew by 26%; real estate rose by 18%.
The higher exposure to equities has paid off – pension funds with a higher share of equities in their portfolios (an average of 39.5%) recorded a 6% performance in the past five years, above the average of 4.6%.
Pension funds lead allocations in German Spezialfonds
Pension funds were the driving force in terms of net inflows in Spezialfonds in Germany in the first quarter of 2021 with allocations of €10.1bn, according to Kommalpha. The peak was reached in February with €5.5bn.
Inflows from insurance companies was negative in the first quarter at €1.7bn, it added.
The inflows of fresh money in Q1 from pension funds reached €15.3bn and from insurance companies €14.2 bn – the highest by far among investors.
Net inflow of funds of credit institutions, non-financial corporations and private organizations was around €5bn in the first three months of 2021. Net inflows from private non-profit organizations was €5.7 bn.
A total of €23.9bn net was allocated to Spezialfonds in Q1, with inflow of fresh money reaching €58.4bn. January was the strongest month in terms of net inflow of funds with €10.4bn.