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Turbulent 2006 still delivered for Swiss schemes

SWITZERLAND - Despite a turbulent year, Swiss pension funds have on average delivered a performance of 6.36% in 2006, according to Swisscanto, the asset management arm of the Swiss Cantonal Bank.

In a yearly study, Swisscanto said 2006 brought pension funds good capital yields, contributing to bringing their reserves up a to "considerable" level.

Surveying 279 pension institutions, 43 of which were public law ones, representing total assets of CHF355bn, the asset manager found the average weighted cash ratio passed the 100 mark for the first time.

"The average weighted cash ratio has improved from 113.0 to 114.4% in the case of private funds and from 98.8 to 100.7% in the case of public ones," Swisscanto said in a statement released today.

On average, medium and small-sized private-law funds have more equities than the large ones, though the reverse is true in the case of bonds, the firm found.

The large funds also hold smaller shares in real estate, relying more strongly on alternative investments.

"Of the 5.8% assets-weighted alternative investments, 3.8% are attributable to hedge funds, 1.3% to private equity and 0.7% to commodities. Some 1.4% of pension assets are already invested in real estate abroad," according to the survey.
 
In comparison with the private-law pension institutions, the public-law ones have a higher equity weighting, namely 31.4% compared with 27.7%, although the cash ratio and the special reserves for value fluctuations are lower on average.

Public pension funds show a bond share of just 37%, private ones, by contrast, 42.2%. However, the private funds are markedly more heavily committed in alternative investments than the public ones.

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