SWITZERLAND – Swiss pension funds returned an average 1.8% in the first half of 2004 compared with 9.5% of the whole of 2003 the Swiss pension fund association, ASIP, and Watson Wyatt said.
The performance comparison of pension funds comprises 70 pension funds with total assets of 124 billion Swiss francs (80.5 billion euros) and has been based on the examination of 600 internally and externally managed portfolios
“With a median return of 1.8% pension funds achieved a slightly positive result on their assets invested in securities,” the report says, adding: “With this mid-year return pension funds have hardly been able to build reserves for fluctuation in market prices, unlike the previous year.”
The difference between the highest and lowest yield was 2.6%, compared with 5.5% in the second half of 2003.
The report also says that, due to the low volatility in financial markets, the range of returns between the investment categories was smaller than in previous years.
The best performance was achieved in Swiss equities, at 6.4%. The range of returns in the second half of 2003 was 6.9%.
Swiss equities accounted for 16.5% of allocations, up from 15.9% a year ago. The allocation to foreign equities has risen to 23.1%. The allocation to Swiss bonds fell from 31.5% to 29.5%.
“In the past two years the proportion of Swiss shares relative to foreign shares has fallen noticeably. The holdings of Swiss shares include a significant concentration of risk due to the substantial weight of a small number of stocks with very large market caps” Watson Wyatt and ASIP said.
Allocation to cash and other, including alternative investment and indirect real estate investments, have risen to 17.4%.