SWITZERLAND - Pension funds in Switzerland got off to a good start in 2007, finishing the first quarter with an average return of 1.4%, according to WM Performance Services, a tracker of institutional portfolios.
WM said Swiss scheme returns were primarily driven by a continued good performance of their equity holdings, despite the February correction in equity markets.
"With a return of 1.4%, Swiss schemes are well on their way to more than exceeding their legally-mandated guaranteed interest rate of 2.5% on pension savings," said Reto Tschäppeler, head of WM Performance in Zurich.
If the schemes' first-quarter return is maintained throughout 2007, Swiss funds are on track to achieve a potential return of 5.6%.
This compares with an average return of 6.9% by Swiss pension funds last year, according to ASIP, the association for the schemes.
WM also said in the first quarter, transaction costs for the Swiss schemes continued to fall, declining by 5% to 24.2 basis points.
According to WM, a unit of US asset manager State Street, the transaction costs make up two-thirds of total asset management costs for Swiss institutional investors.
But in the mid-20 range, Swiss transaction costs are well below the global average of 43.1 basis points, WM has also calculated.
According to ASIP, Swiss schemes held around 40% of their assets in equities last year, including 26% in foreign shares and 14% in Swiss stocks, while fixed income assets amounted to 41% of their total holdings, including 24.4% in Swiss bonds and 16.3% overseas.
Real estate also made up 8% of Swiss schemes' assets, followed by private equity and commodities (5.3%), cash in (3.4%) and 2.8% allocated to hedge funds.
No comments yet