Swiss pension funds are seeking to further diversify their investment portfolios as they face the prospect of negative interest rates and lower returns on fixed income.
Pension funds are considering further cuts to their exposure to nominal assets to invest proceeds in real assets and riskier assets such as equities.
The average allocation to equities in Swiss pension funds’ investment portfolios has already increased from 32.1% to 33.1% year-on-year in 2024, and it is now not too far from the high level of 33.8% reached in 2021, according to asset manager Swisscanto.
CPEG, the pension fund for the canton of Geneva, and PKG, the Swiss pension fund for small- and medium-sized enterprises, are shifting allocations to riskier assets.
CPEG has changed its asset allocation strategy to lift investments in equities from 24.2% to 30% of total assets worth CHF23bn (€24.5bn). In contrast to its peers, the pension fund has opted to allocate a large share of its assets to US equities in its latest round of investments.
Meanwhile, CHF11bn PKG plans to increase its allocation to illiquid assets, including infrastructure, private equity and real estate.
The appetite of pension funds in the DACH region for private market strategies did not go unnoticed by consultancy Mercer. The firm has partnered with Universal Investment to launch a closed-end special alternative investment fund (AIF) tailored to the needs of German institutional investors and pension funds.
Mercer Alternatives will launch an evergreen infrastructure equity strategy in the fourth quarter of this year, in partnership with Helvetia Anlagestiftung, for Swiss pension funds.
Consultancy Aon, instead, is recommending German corporate pension funds refrain from making new investments in the US, and carefully rebalance allocations as capital moves to safer havens.
Equity market volatility is likely to result in capital shifts to safe havens such as Europe and Japan, and possibly Canada and Australia, according to the consultancy.
Items to note:
- Germany’s €1.7bn Pensionskasse Rundfunk, the occupational pension fund for employees of the country’s public broadcasting corporations, is launching a new automatic enrolment plan targeting workers in the film, TV, and streaming industries.
Luigi Serenelli
IPE DACH Correspondent
This news briefing was published earlier in the week. If you would like to receive it regularly, on your ‘IPE profile’, go to ‘My Newsletters‘ and select any from the list.
Luigi is IPE's Berlin-based DACH correspondent.
His coverage includes regulation and the latest pensions and investments trends, and, being a native Italian, he also covers Italy’s pensions market.
He has reported from Italy and Germany on international politics and business for European and US publications including USA Today, Bloomberg BNA and for the investigative magazine L’Espresso. He was previously Germany correspondent for Mergermarket covering M&A.View full Profile
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