PK SBB, the CHF18.7bn (€19.6bn) pension fund for the Swiss federal railways, is tweaking its investment strategy to boost its allocation to equities while reducing Swiss bonds.

The fund’s equities allocation will continue to increase slightly until the end of this year, while, in contrast, the scheme plans to also reduce its exposure to real estate investment trusts (REITs) abroad and to bonds denominated in Swiss francs, Dominik Irniger, the fund’s head of asset management, told IPE.

PK SBB opted to increase its equities allocation from 24.5% to 27% of total assets under management. “The main reductions took place in bonds in Switzerland and credit investments. Within bonds, [allocations to] safe bonds issued abroad were increased,” Irniger added.

Last year the pension fund achieved returns of 6.9%, only marginally up from 6.5% recorded in 2023. Its funding level rose from 107.9% to 110.8% year-on-year in 2024.

“Equities contributed the most to the positive performance last year, with interest-bearing investments also making an important contribution to the overall results in 2024, and Swiss bonds increasing in value significantly,” Irniger said.

He added that other asset classes including real estate and credit investments also made a positive contribution to the overall performance of the fund, while the high currency hedging ratio had a negative impact on returns last year.

The highest returns in 2024 were achieved with equity investments in developed countries, according to a research paper – Investment strategies in 2024 – published by consultancy PPCmetrics.

Pension funds pursuing strategies with a high allocation to equities tend to have higher returns ranging between 4.0% (with a 10% allocation to equities) and 16.0% with 60% of assets invested in equities, according to the paper.

Gold and listed private equity investments recorded the highest returns last year, with 33.4% and +32.7% respectively, the only asset classes outperforming the global stock market, followed by listed infrastructure investments with 22.78%, PPCmetrics added in the report.

The lowest returns were achieved by commodity investments, hedge funds and listed foreign real estate with 12.42%, 12.30% and 8.81%, respectively, it added.

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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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