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Impact Investing

IPE special report May 2018

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UBS goes in-house for its pension fund

Two years after the merger of UBS and SBC Warburg the Sfr18bn (e11bn) pension scheme for the group’s combined 35,000 Swiss employees and 11,500 pensioners, the”Pensionskasse der UBS” - now one of the three largest schemes in Switzerland, has begun operations with UBS Brinson itself managing the bulk of the assets.
Christian Perschak, managing director of the pension company, comments:“The majority of the money in traditional mandates will be managed by Brinson, but we have some external mandates also.”The decision has been taken despite market figures which show UBS Brinson reporting weak results during 1998 for some funds and receiving few major mandates in the same period.
Perschak comments: “We are a totally new pension scheme with a new strategy and asset allocation giving a different way of managing assets than in the past. I’m not looking backwards at the moment because I do not have any responsibility for the management or past performance of this pension plan.
“ What I’m trying to do is set up the whole investment management process in a way that this will not happen in the future.”Perschak says the fund is looking to increase indexation use and put in place a new process for the fund’s asset management.
Around three quarters of the scheme’s equity portfolio is indexed at present with the overall equity level standing at approximately 30% of the fund.
The long term objective is to push this up to the 50% limit, says Ulrich Niederer of UBS Brinson who is president of the fund’s investment committee in what he calls a “pragmatic not dogmatic decision”.
Half of the fund’s equity exposure is overseas and the overall non domestic portion of assets is predicted to rise to 40% of the total assets.
Alternative investment is also slowly being built up, as Perschak notes:“ We have some fund of funds investment and we will be discussing the alternative portion in our board of trustees meeting at the end of November. We do have a sizeable possibility in the portfolio for alternative investments.”
“ The number one priority at present though is getting the asset allocation right. Then we will decide on further mandates.”
Hugh Wheelan and Erich Solenthaler

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