SWITZERLAND - Swiss pension funds performed “well under” the Swiss Balanced Benchmark index in 2004, hit by holding too many equities, according to State Street’s WM Performance Services.
WM said Swiss annual returns amounted to 3.6%, compared with a benchmark return of 4.6%.
WM said it used a sample of selected pension fund portfolios spanning a representative range of sizes and asset managers.
The company declined to elaborate on the number of pension funds polled and their assets.
“On the whole, the past year saw a number of ups and downs, but in the end the annual returns can be considered satisfactory,” said Peter Leutenegger, marketing and sales vice president at WM in Zurich.
The operation was formerly called InterSec and has since become part of WM.
Luetenegger added the sample had “clearly missed” its benchmark return target for the year and forecast that Swiss equity managers would face challenges to help position their clients well for 2005.
“Underperformance against the 2004 benchmark return was down to equity over-weighting and selection,” WM said.
Swiss equities were 2.4% overweight relative to the WM benchmark, while international equities were 3.1% overweight.
“Both contributed negatively to relative pension fund performance, as did poor stock selection within the international equities asset class,” WM added.
The study also said that median manager returned 1.9% for the fourth quarter, up from 0.1% in the previous quarter.
This compares with benchmark returns of 2.1% for the WM Performance Services Swiss Balanced Benchmark and 2.2% for the Pictet BVG/LPP index.