Aargauische Pensionskasse (APK), the CHF12.5bn (€12.7bn) Swiss pension fund for the employees of the canton of Aargau, will review its investment strategy and expand its sustainability strategy to further asset classes, according to the scheme’s latest annual financial statement.

The scheme has put on its agenda “the periodic review” of its investment strategy, addressing other aspects of its approach towards sustainability, said new chief investment officer Adriano Sbriglio.

APK applies its sustainability strategy – a mix of exclusions, corporate engagement and dialogue with asset managers – to equities, bonds, Swiss real estate and infrastructure investments, according to the statement.

It also invests in private debt, and other alternative asset classes, indirectly in real estate abroad, and gold, the report added.

APK pursues a climate strategy when investing in global equities, including small-cap and emerging market equities, through a passive approach, with an index underweighting stocks with high CO2 emissions and overweighting stocks with low CO2 emissions, it said.

Last year, it switched the benchmark for its emerging market equities portfolio to the MSCI Low Carbon Target Index to further reduce CO2 emissions.

Asset managers take into account climate risks for the pension fund’s nominal value investments using, instead, a more active approach, APK noted.

The analysis of key figures for nominal value investments, however, led to the conclusion that data collection with the asset managers needs further improvement, the scheme said.

Energy and CO2 intensity and the share of non-fossil energy sources are reported on for investments in Swiss real estate.

APK last year returned 4.94% against a 4.95% benchmark, with its funding ratio going up to 101.2%, from 98.1% in 2022, according to the statement.

“2023 was a historic year for the APK. For the first time since the [occupational pension system] BVG existed in its current form, APK has a fluctuation reserve in its balance sheet at the end of the year,” said chief executive officer Jan Sohnrey, and executive board president Liselotte Siegrist.

Looking for IPE’s latest magazine? Read the digital edition here