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Swiss schemes ‘invest more in alternatives’

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SWITZERLAND – Swiss institutional investors have invested more in alternative asset classes and real estate in 2004 - but their asset allocation “remains prudent” a survey sponsored by Credit Suisse Asset Management suggests.

The survey, conducted by Lusenti Partners, polled 174 schemes, mainly large institutional investors, with a total wealth of CHF214.7bn (€138.6bn).

“Average allocation remains prudent, but broadly diversified. The essential focus is on asset classes offering a high degree of liquidity, and there has been a sharp reduction in the allocation to bonds,” the report said.

According to the study, the investment horizon of Swiss institutional investors has also shortened with “relatively short intervals” between strategic and tactical allocation decisions.

New asset classes are selected more frequently, the quarterly survey also indicated.

“It is worth mentioning the slight increase in the relative weightings of alternative and real estate investments – especially indirect real estate,” it also said.

The average performance of the participating institutions was 4.28%, with public sector pension funds recording slightly better performance (4.9%) than their private sector counterparts (4.2%).

Pooled foundations achieved a 3.8% return and insurers 3.5%. The Lusenti study said that the final quarter “significantly” boosted the year-end figure.

Performance to the end of 2004 was driven by indirect real estate investments and equities, while alternative investments like hedge funds and private equity posted the “most disappointing performance”.

Swiss and foreign bonds were found to be “contributors” to the relative underperformance.

Institutional investors kept “strict control” over processes, and responsibility for specialist investment decision-making was kept in-house. But the survey found no improvement in the average coverage ratio.


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