SWITZERLAND - The Swiss Pensionskasse for civil servants Publica returned -1.43% in the first three months of this year.

The funding level fell to 95% from 95.8% at the end of 2008, the pensionskasse noted in its full-year report.

Publica, which switched from a defined benefit to a defined contribution system last year, did at least reveal it beat its benchmark under the full year-performance of 2008. (See earlier IPE article: Publica returns -6.86%)

While the benchmark had a negative return of -7.2%, Publica managed a -6.86% return because "of underweighting [in] equities", the fund stated.

The bond portfolios returned 5.23% against a benchmark return of 5.13% but all other asset classes underperformed via their respective indices.

When discussing equities - which saw a loss of 42.35% against the benchmark of -41.23% - Publica noted the underperformance of the asset class was because of "an underweight[ing] of Swiss equities".

The real estate portfolio containing directly-held Swiss properties missed the benchmark return of 5.4% by 1.62 percentage points as the portfolio is still in incomplete building projects.

"Part of the capital is invested in unfinished projects, which are absorbing capital but not generating a return yet," said Publica.

The other positive contributor to the fund's overall return was the mortgage market, which returned 3.08% against a benchmark of 3.27%.

The fund is looking to up its direct real estate holdings from CHF1.8bn (€1.2bn) currently to CHF3bn.

Publica is managing its real estate and mortgage portfolios itself via Publica Asset Management, as it does for most of its bond investments.

The pension fund outsources some foreign bond portfolios to Swisscanto, while all equity investments are passive and managed by Credit Suisse, Pictet and Barclay Global Investors.

Russell Investment and Record Currency Management are also respectively tasked with currency hedging on the equities and bond portfolios.

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