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Impact Investing

IPE special report May 2018


Swiss pension funds increasing risk in portfolios, survey shows

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  • Swiss pension funds increasing risk in portfolios, survey shows

SWITZERLAND - Swiss pension funds' exposure to equities and alternative investments continues to rise, according to Swisscanto's latest survey.

Presenting its analysis of a survey of 340 Pensionskassen published earlier this year, Swisscanto noted a "remarkable" trend of an increasing exposure to foreign equities, while domestic equities were underweighted in 2011.

This trend is particularly true for private pension funds, while public Pensionskassen tend to stick to domestic equities more, it said.

Similarly, public funds have been less likely to increase exposure to alternative investments, while Swisscanto noted an "ongoing trend" in this direction among private pension funds.

This includes additional investments in high-yield bonds, which are mostly booked as alternative investments, it said.

As per year-end 2011, the average equity exposure stood at 26%, while the average bond exposure was 27.9%. Over the same period, Swiss schemes on average invested 20.9% of their portfolios in real estate and 0.9% in alternatives.

Despite the greater risk, most pension funds did not manage to generate positive returns for 2011, which, according to Swisscanto "exacerbates a situation that has been going on for years", namely the transfer of money from active to retired members within the Pensionskasse.

At a press conference in Zurich yesterday, Gérard Fischer, chief executive at Swisscanto, called for separate reports on funding for assets of retired and active members to make such transfers visible.

Alfred Bühler, partner at PPCmetrics, presented a "risk-based funding level" that allegedly showed the actual funding situation of assets of active members given the guarantees made to retired members.

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