Swiss pension funds are facing rising concentration risks in domestic and global equities, bonds, and regional exposures, particularly the US, according to the Pensionskassen-Jahrbuch 2025 report published by consultancy PPCmetrics.
The study shows that around two-thirds (67.5%) of total pension assets of CHF859bn (€921bn) are invested in bonds and equities. The remaining 32.5% is allocated to real estate, alternatives and infrastructure.
Within fixed income, an average 24.2% of total assets are invested in bonds denominated in Swiss francs, and just under 12% in foreign-currency bonds. Among bonds from foreign issuers, US government and corporate debt represent a significant share.
Equities account for 31.4% of total assets, split between 10.5% in Swiss and 20.9% in global equities, according to PPCmetrics’ annual report.
“Our analysis shows that, despite the boom in the US stock market, concentration risks are most likely to be identified in Switzerland. The overweighting of the Swiss equity and real estate markets is a ‘home bias’,” said Alfredo Fusetti, head of department investment consulting and controlling at PPCmetrics.
The five largest Swiss stocks, including Nestlé, Roche and Novartis, made up around 15.5% of pension funds’ equity holdings, or 4.8% of total assets on average. By contrast, the five largest US stocks represented 3.3% of total assets. PPCmetrics said this points to an overweighting in individual companies and a related concentration risk.
Concentration risks, it added, arise from the positive price performance of individual stocks combined with market-capitalised benchmarks. Fusetti noted that pension funds invest across asset classes and in multiple individual positions, but remain exposed to such risks.
PPCmetrics said, however, that Swiss pension funds systematically analyse concentration risks as part of the investment process – considering countries, sectors and single-stock exposures – to build resilient portfolios.
Asset and liability management studies, which pension funds conduct approximately every three years, address concentration risks and mitigate them through a broadly diversified investment strategy, Fusetti said, adding that investors often reduce such risks within asset classes through active positioning.
Pension fund assets generated a record 2.79% return year-to-date, according to PPCmetrics.
“Portfolio diversification remains the cornerstone of any investment strategy. It is important for each asset class to examine whether it yields an independent risk premium or has a diversification effect, and if so, at what cost and risk. The liquidity and complexity of the portfolio must also be taken into account,” Fusetti noted.
At the end of August, the economic funding ratio of Swiss pension funds stood at 114.9%, slightly up from 113.5% at the end of last year, the report showed.
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