Investments at Switzerland’s largest pension fund gained an estimated net 9% across its CHF40.5bn (€37.2bn) on a consolidated basis, with domestic stocks driving equities’ overall top contribution to the result.

Without currency hedging, the net increase across Publica’s two investment strategies would have been 9.2%. The pension fund for federal employees said the 9% performance was 0.06% above the benchmark, which it attributed to “positive tactical and selection decisions”. IPE was unable to obtain details about these decisions by the time of publication.

All its main asset classes made a positive contribution to the overall 2019 performance, in particular equities. Switzerland was the best performing region, posting gains of more than 30%, followed by North America (more than 26%) and Europe (+22%).

Bonds were the next biggest overall contributor, with US-dollar denominated emerging market investments and Canadian sovereign bonds on opposite ends of the performance spectrum, gaining 12.8% and 1.1%, respectively.

Real estate also contributed positively to the overall 9% result, although much less than equities and bonds. Directly held Swiss real estate, including revaluation, registered a 6.6% return while foreign real estate funds returned 1.8% on a currency-hedged basis.

To diversify, Publica also invests in precious metals such as gold and silver. The asset class gained more than 15% in 2019, which the pension fund said corresponded to a contribution to the total annual gain of 0.3 percentage points.

Publica operates two different investment strategies, one for its 13 open pension plans and one for seven closed pension plans.

The investment strategy for the open plans, which account for the bulk of assets (CHF37bn) and is more exposed to asset classes such as emerging market and ex-Switzerland developed market equities, gained 9.2% after all costs and taxes in 2019, while the strategy for the closed plans led to a 6.8% return.

In 2018, Publica posted a net loss of 3.3% on its consolidated assets, and -3.5% and -0.2% on the open plan and closed plan strategies, respectively.

The discount rate for the closed plans was cut to 0.5% with effect from the end of December.