SWITZERLAND - Swiss Pension funds returned -8.38% for the first half of this year, according to State Street's latest Swiss Pensionskassenindex.

Unlike Credit Suisse, State Street only includes assets held by its custodial business for clients to calculate the index and so excludes assets like direct real estate holdings. (See earlier IPE-article: Swiss funds saved by direct real estate)

Credit Suisse had calculated losses of -5.6% for the first quarter and a positive outturn of 0.2% for the second quarter while State Street reported average first quarter returns of its clients of -8.04% and second quarter returns of -0.37%.

"This is the fourth consecutive quarter with negative returns," State Street noted in a press release.

Returns would have been worse had it not been for domestic bonds, which slightly offset strong declines in the Swiss equity markets.

"The market recovery we had hoped for has not taken place," added Reto Tschäppeler, vice-president at the company's Zurich office.

State Street also noted transaction costs, which make up one third of pension funds' asset management costs, continued to decline in Switzerland, following an international trend which started in 2001.

Since the beginning of this year costs decreased by 6.86%, from 22.44 bps to 20.90 bps in the last quarter.

State Street also noted that globally transaction costs were falling, but at 34.89 bps remaining higher than in Switzerland.

However, transaction costs in major markets such as Germany, the Netherlands and the UK have fallen below 20 bps over recent months.

And in the US, where the decline has been most pronounced, transaction costs are now nearing 10 bps.

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