Compenswiss, the public institution managing Switzerland’s first pillar social security funds AHV, IV and EO, has seen returns of roughly CHF2bn (€1.9bn) last year, said chair Manuel Leuthold in an interview with national newspaper Handelszeitung.
The institution’s investment portfolio returned “around 5%” in 2021, driven by equity and real estate markets, he said.
Returns were on par with the 5.22% achieved the prior year when a “massive slump” hit stock markets in March. AHV achieved total returns including liquidity of 4.05% in 2020, the IV fund 4.29% and EO 4.34%, according to the latest financial statement.
This year was “much quieter, which wasn’t exactly to be expected,” Leuthold said, adding that Compenswiss closed “every month with zero [gains] or with [positive] returns, except in September, which was negative.”
Assets are managed by BlackRock, Barings, State Street Global Advisors and Compenswiss also works with Cantonal Bank of the canton of Vaud, Credit Suisse, Mirabaud, Pictet, Maerki Baumann and UBS, the president said.
According to Leuthold, Compenswiss allocates 60% of its assets to fixed income – it has assets worth CHF40.57bn invested in bonds denominated in foreign currencies (36.74%), bonds denominated in Swiss francs (11.28%) – while 22.80% is in equities, 11.56 % in real estate, 2.37% in commodities, 7.10% liquidity, 3.45% in loans and 3.76% is allocated to tactical investments, as of the end of September last year.
It also holds 3% of its assets in gold to diversify and stabilise its investment portfolio.
Compenswiss is set to increase its equity allocation to 26%, Frank Juliano, chief investment strategist and member of the executive committee, told IPE.
“We are in the process of increasing our equity share to 26%. We do this slowly but steadily,” Leuthold reiterated in the interview, adding that for real estate the goal is to reach a 13% allocation.
“This includes real estate in Switzerland and abroad, but these are not direct investments, for example in projects. We invest in securitised real estate [assets], listed and unlisted,” he said.
Within equities, the pension fund has invested 23% of its assets in large caps in North America, 22% in emerging market equities, 19% in large caps in Europe, 16% in small, mid and large caps in Switzerland, 9% in large caps in the Asia-Pacific region, 7% in global small caps and 4% in small and mid caps in North America, according to its latest financial statement.
Gold and equities recorded the best performance among all asset classes in 2020 with net returns of 13.50% and 5.34%, respectively.
This year Compenswiss has started a project called “zero measurement” to have precise ESG data relating to the portfolio, Leuthold said.
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