SWITZERLAND - The pension fund of the Swiss canton of Bern, Bernische Pensionskasse (BPK), will review its asset allocation following a disappointing performance in 2010.
For last year, the fund reported a return of 1.2%, below the Swiss average of around 2% calculated by Swisscanto.
This brought the funding level down to 88% after having reached 90% at year-end 2009.
Hans-Peter Wiedmer, deputy director of the BPK, confirmed to IPE that the fund would review its asset allocation in 2011, but declined to provide any further details.
According to reports, the fund had chosen not to hedge its currency exposure, which led to losses as the euro fell.
Another cause for its underperformance compared with other Swiss funds might be its low real estate exposure of around 3% (as per 2009), as this asset class was a source for positive returns for other funds last year.
A case in point is the pension fund for teachers in the canton, the BLVK, which also presented its results for 2010.
The 4.4% return brought the funding level to 78.8% from 77.4%.
According to the fund, equity and real estate investments, as well as the currency hedging, contributed positively to performance.
Another Swiss fund that has recently reported its 2010 results is the Pensionskasse for the canton Basel-Landschaft, the BLPK.
It returned 2.4% in 2010 thanks largely to its hedging strategy, covering 50% of its currency exposure.
In retrospect, the fund said, it might have been "more advantageous" to stick fully with Swiss francs or implement a 100% currency hedge.
However, it also pointed out that such a measure would be counterproductive should the euro or the dollar strengthen again.
Hedging only half of its currency exposure had been part of the fund's strategy to take some risks in its asset allocation to achieve higher returns.