SWITZERLAND – Swiss pension funds have finished 2005 with a return on assets of 13% - their best result since 2000, when Swiss pension fund association ASIP began disclosing their annual performance.
Citing a study compiled on its behalf by consultant Watson Wyatt, ASIP said last year’s double-digit return was due to bullish equity markets and a stronger Swiss franc against the dollar.
The return for the schemes is slightly above ASIP’s own previous estimate of 12%. It also compares with a return of 4.2% for 2004
“The positive result shows that those who are steering pension funds are living up to their responsibilities in portfolio management. The development of the portfolios also shows that the funds are investing for the long term,” ASIP remarked.
Elaborating on the performance of Swiss pension funds, the association said the median for the schemes beat the relevant benchmarks in foreign equities and in foreign bonds. The median was on par with the benchmark for Swiss equities but slightly below that for Swiss bonds.
Equities and bonds account for 80% of the assets held by Swiss pension funds. The other 20% is invested in real estate, private equity and hedge funds.
Despite the strong return, ASIP said several pension funds would need “several more years of bullish equity markets” to build up reserves and thereby withstand sudden market fluctuations.
Nonetheless, the 2005 return for Swiss pension funds is the highest among those in German-speaking Europe so far. Last week, Austrian pension fund association FVPK said that country’s schemes finished 2005 with an average return of 11.4%.
In Germany meanwhile, returns for pension funds have been significantly lower. For example, Ärtzeversorgung Niedersachsen (AEVN), a €5bn pension fund for physicians in Lower Saxony, said it finished 2005 with a 5% return, as performance was partly dragged down by low bond yields.
Separately, the Swiss national bank has reported that of the CHF 2.6trn (€1.6trn) in foreign assets held in Switzerland, CHF 1.43trn were from institutional investors, including pension funds.