SWITZERLAND – Swiss first-pillar pension fund AHV reported a return of 6.8% for 2012, while the largest public fund Publica returned 8% over the same period.
Since 2011, AHV has been divided into the AHV itself, with CHF23.3bn (€19bn) in assets under management as per year-end 2013; the disability fund IV, with CHF4.7bn; and the fund for maternity leave and military service (EO), with CHF461m.
For 2012, the AHV and the EO both returned 6.8%, while the IV returned 4.5%, due to its more conservative risk structure.
This year, the AHV said it aimed to expand the foreign currency hedging in the portfolio to Swedish kroner and the Hong Kong dollar.
The scheme, which coordinates all of its portfolios, currently manages about 60% of the assets in-house, excepting real estate, equities and some of the foreign-currency bonds.
In total, it has awarded 37 mandates, 21 of them active, and is now looking for an additional quantitative investment manager and a treasury manager for its in-house investment team.
Meanwhile, the CHF35bn federal public pension fund Publica reported a 7.9% return for 2012 bringing the average funding level among all member schemes to 105%.
The fund noted in a statement that the performance would only have been 7.6% without the currency hedge, and that it outperformed several benchmarks including the Pictet index based on a model portfolio (7.58%), the ASIP sample average (6.3%) and the Swisscanto pension fund monitor (6.7%).
Publica also announced that it has launched a buffer fund containing 2.5% of its total assets to compensate its members for the cut in the discount rate, or technischer Zins, in 2015.
In other news, the public pension fund for the canton of Zurich, the BVK, said it would reduce its exposure to alternatives by 4 percentage points this year, cutting commodities in particular and removing hedge funds from its asset allocation.
The scheme will increase its equity exposure and real estate holdings, “increasing the likelihood of reaching a 100% funding level by 2020 to 80%”.
Further, the fund, which returned 8% in 2012, will halve its currency hedging to 15% of the portfolio.
The BVK also confirmed it had received the first CHF400m tranche of CHF2bn in financial aid, and that five further tranches were to follow by November.