Publica, Switzerland’s largest pension fund with CHF44bn (€42.6bn) in total assets, has cut its CO2 intensity in corporate bond portfolios by 40% against its benchmark in the course of last year, it said in its 2021 financial statement.
The pension fund’s investment committee had decided to take climate-related opportunities and risks into account in its corporate bond portfolios back in 2020. Meanwhile, Publica has also gradually extended the climate-efficient equity index licensed by MSCI and approved by its investment committee in December 2019 to all regions as planned, it added.
Through the equity index Publica underweight investments in companies exposed to climate risks and overweight investments in companies that are already well prepared to face climate risks or that deploy technologies to reduce greenhouse gas emissions.
Publica returned 4.4% in the 2021, 0.3 percentage points above its benchmark, driven by investment in equities and real estate. Its funding ratio stood at 108% last year, up from 106.6% in 2020.
The average annual return over a long-term investment horizon, from 2000 to 2021, is 3.3%, a gain above its benchmark of 3.1%. Assets under management rose from CHF42.5bn in 2020 to CHF44bn in 2021.
The open pension schemes with assets worth CHF41bn allocated in 2021 2.6% of assets to money markets, 5.3% to Swiss bonds, 9.6% to Swiss francs bonds hedged in foreign currencies, 7.9% to government bonds of developed countries ex-Switzerland, 6.4% to inflation-linked government bonds, 8.5% to public corporate bonds, 3.5% to private corporate finance, 3.4% to financing infrastructure, 2.7% to private real estate, 3% to emerging markets (EM) bonds hard currency, 5% to EM bonds in local currency, 3.1% to Swiss equities, 16.1% to developed countries equities ex-Switzerland, 7.7% to EM equities, 2.2% to precious metal, 6.3% to Swiss real estate and 6.7% to foreign real estate.
The closed pension schemes with CHF3bn in assets allocated in 2021 3.4% to money markets, 18% to Swiss bonds, 11.6% to Swiss francs bonds hedged in foreign currency, 6.8% to government bonds of developed countries ex-Switzerland, 5.3% to inflation-linked government bonds, 12.4% to public corporate bonds, 2.8% to private real estate, 5.1% to EM government bonds in hard currency, 3.2% to Swiss equities, 7.1% to developed countries equities ex-Switzerland, 3.3% to precious metals, and 21% to direct Swiss real estate.
AHV fund with positive result on investments
AHV, one of the three social security funds managed by Compenswiss, has closed 2021 with positive investment results of CHF1.65bn, pushed by a strong economic recovery in Switzerland and internationally, it said in a statement.
An interest rate payment of 0.5% for the IV fund on its debts of CHF51m to the AHV also contributed slightly to the positive result.
AHV recorded positive income of CHF880m, confirming the positive trend observed in 2020, mainly driven by additional financing of around CHF2bn from the tax reform. Operating returns for 2021 stood at CHF2.58bn.
The IV fund closed instead 2021 with a loss of CHF366m, and return on investments of CHF159m, with an operating return of -CHF207m.
The amount of debt for the AHV remains unchanged at CHF10.28bn. The positive operating returns over the years of the IV fund have however contributed to reducing that debt by CHF4.66bn.
The EO fund closed 2021 with a profit of CHF165m, positive results on investments of CHF66m and operating returns of CHF231m.
Compenswiss recorded net returns on assets of 5.28% at the end of 2021, on par with the previous year’s level (5.22%). Total assets for the AHV, IV and EO funds amounted to CHF40.91bn at the end of December last year, up from CHF38.56bn at the end of 2020.
AHV held CHF35.89bn in assets, the IV fund CHF3.61bn and the EO CHF1.39bn.