SWITZERLAND - September delivered the second-worst month in terms of performance this year for Swiss Pensionskassen, as market volatility generated a negative return of -3.25%, according to Credit Suisse.

According to the investment bank's calculations, only January delivered a worse return on investments of -3.3%.

The negative performance of investments during September wiped out the 0.8% gain pension funds respectively achieved in July and August and dragged third quarter performance down to -1.6%.

Funds are now down 6.9% since the beginning of this year, according to Credit Suisse.

However, the situation is likely to be worse still as the State Street Pensionskassenindex,  which is usually published about a week after Credit Suisse data, will show a much larger negative figure because it traditionally does not include funds real estate holdings. (See earlier IPE article: Swiss returns slump to -8.38% without property)

According to Swiss consultancy Lusenti, Swiss real estate both direct and indirect were the only asset classes  - apart from commodities - to contribute positively to pension funds' portfolios in the first half. (See earlier IPE article: Swiss funds stick to allocation)

Lusenti calculated funds generated a negative return of 6% to the end of September, based on an online survey.

Credit Suisse said it will reveal more details on its calculations for Q3 in two weeks but the asset manager confirmed the index was now down again after a slightly positive Q2 of 0.5%.

This means Swiss pension funds will once again miss their minimum return rate of 0.68% for the quarter, so this could influence a pending debate on the lowering of the conversion rate, which is used to calculate annuities, from its current 6.8% to 6.4%.

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