IPE DACH Briefing: Pension funds retreat from the US while looking at Asia

Pension funds in the DACH region have begun to retreat from the US markets while eyeing Asia and Europe to reallocate their assets, in the wake of trade conflicts, and the prospect of robust economic growth and political stability in those regions.

German pension funds are recalibrating their asset allocation strategies considering the country’s Gross Domestic Product (GDP). Based on this metric, China will compete with the US for the role of largest world economy and India will climb to the top three countries globally in the GDP ranking, according to the World Economy League Table 2025 published by The Centre for Economics and Business Research.

This explains why several German pension funds are increasing their allocations to Asia: the pension fund for the construction industry SOKA-BAU plans to increase its allocation to 35%, from the current 12.7%; while the pension fund for doctors in the state of North Rhine-Westphalia Nordrheinische Ärzteversorgung (NÄV) to 30% from the current 8%; and KZVK plasn to allocate 10-25%, depending on the asset class, from the current 8.52%.

Within Asia, the pension funds are sceptical about investments in China, where the government maintains control over the economy, and the real estate market suffers, while overweighting Japan, and making first steps to invest in India.

The shift to Asia, and to Europe, takes place as pension funds in the DACH region retreat from the US market. Corporate pension funds are lowering their exposures to equities, the dollar and US Treasuries, and hesitating to commit new capital to private markets in the US.

Manor Pensionskasse, the pension fund of the Swiss retailer, has started to tactically underweighting US Treasuries in favour of Swiss bonds and gold as a result of shifting US trade and economic policies.

Increasing hedging costs and growing concerns over US fiscal policy are nudging Swiss pension funds to reassess their exposure to US dollar-denominated assets.

Meanwhile, Swiss pension funds are instead opting to increase private market allocations to over 10% of total assets, the highest level in the last two years, boosting particularly infrastructure investments globally, according to consultancy Complementa.

GastroSocial Pensionskasse, the CHF11bn Swiss pension fund for the hospitality industry, has boosted private market investments through a new investment strategy to minimise short-term returns volatility and achieve high net returns.

Items to note:

• The IPE Transition Conference & Awards 2025 is taking place on 17 June at the Cardo Brussels in Belgium

Luigi Serenelli

IPE DACH Correspondent