A survey commissioned by Switzerland’s asset management association (SFAMA) and conducted by researchers from the University of St. Gallen has placed the average total expense ratio (TER) for a sample of Pensionskassen at around 0.6%.

The survey – one of the first to cover costs since new rules on mandatory TER reporting for Pensionskassen came into effect – included 81 pension funds from the public (36), corporate (26) and multi-employer (19) sectors.

Pensionskassen have been required to include TERs for each investment in their annual reports since 2013.

According to the SFAMA’s survey, 75% of the reported costs in 2015 stemmed from portfolio management, while administrative and other costs only played “minor roles”.

University of St. Gallen researchers said they were surprised to find that the majority of pension fund managers still seemed “very satisfied with the cost/return ratios for bonds, stocks and real estate”.

“The general fund-manager perception,” they write, “might still be based on the high stock returns of previous years.”

No distinction was made in the survey between domestic and foreign investment in the various asset classes; the  managers in the survey, however, remain “a bit more cautious regarding the assessment of private market (private equity, private debt, private infrastructure) and hedge fund-related investments”.

The researchers argue that these findings point to a “discrepancy between perception and hard figures with regard to delivered returns”.

According to the SFAMA study, net returns on asset classes with high TERs were higher than net returns on asset classes with lower costs.

Calculations based on the financial year 2015 showed net returns to have been highest for private equity investments, at 6.4%.

Only the net returns on real estate investments, at 4.5%, came close to matching this.

The mean net returns for stocks came in at 0.3%, and for bonds at 0.1%.

For nearly 80% of the survey’s respondents, net returns were among the most useful criteria for assessing performance.

Even more important – 95% of respondents agreed to its usefulness – was the risk/return ratio.

Only 14% of respondents considered this ratio as “good” for bonds, while another 31% thought it was “fairly good”.

For private equity, the split was 17% (good) to 57% (fairly good).

The highest risk/return ratio was assigned to real estate, with 55% saying it was “good” and another 38% agreeing to “fairly good”, which the researchers found “astonishing”.

For more on asset management trends in the Swiss second pillar, see the November issue of IPE magazine

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