SWITZERLAND – Swiss pension funds have shown a turnaround in fortunes in the first quarter of 2002, with the median manager in the InterSec balanced universe returning 1.1%, according to figures just issued by Zurich-based research group.

But the figures are not necessarily indicative of a long-term upward trend. The turnaround is a welcome improvement over last year’s average losses of 7%, but a spokesman for InterSec says Swiss pension funds are not out the woods yet.

“The good results are not conclusive proof that the troubles encountered during 2001 are over, nor can we say yet that it is the start of a long-term trend. The first quarter returns are still way below the 4% target return range that Swiss pension funds were easily reaching before last year,” he says.

InterSec blames investments in overseas equities as the main reason for the downturn and slow recovery but is curious as to why some pension fund managers in Switzerland are continuing to raise their exposure to them.

“Some managers in line with index returns have drastically cut their overseas equity weightings but others continue to allocate more and more of their assets to foreign equities. Maybe their long-term outlook is particularly optimistic,” he says.