SWITZERLAND - The Swiss first pillar buffer fund AHV is looking for an investment consultant to take over a wide range of services including looking at "new asset classes" and providing "forecast analysis".

Watson Wyatt is currently its investment controller on the level of the administrative board "but no permanent investment adviser" is currently in place and various advisers had been used from time to time, according to Eric Breval, chief executive of the CHF25bn (€17bn) fund.

"The board is confronted today with more and more complex questions," Breval pointed out.

So on top of signing new recruits in the fund's administration, AHV has decided an external opinion should be sought "on a more systematic basis", to help make investment decisions.

The consultant is required, as part of its service, to provide the tender names as well as "assistance in the analysis and implementation of ALM strategies".

That said, Breval explained "ALM does not have the same meaning as for pension funds in the second pillar" as AHV is a first pillar fund based on a pay-as-you go system.

He confirmed the consultant will assist with "forecast analysis", as provided in the past either by external service providers or through the federal ministry for social insurances (BSV).

The consultant will also expected to help the fund with "the analysis of new asset classes/ segments" albeit Breval pointed out "no decision had been made yet" on which asset classes they might be.

"Every year, a study verifies the appropriateness of our strategic asset allocation," explained Breval.

The consultant will also be required to help review the currency overlay structure put in place by the fund 10 years ago, as well as give advise on "best practice" in the organisation of the fund and provide market analysis.

The AHV fund reported an 11.5% return last year, but the actual portfolio return was 1.7 percentage points higher as a part of the return was put aside as liquidity buffer. (See earlier IPE story: AHV reports over 9% for first 10 months)

The fund increased its asset allocation in foreign bond holdings in 2009 from just under 30% to 36% and a slightly reduced its equity allocation from 24% to 22%.

The AHV last week revealed 47% of its debt investments are in foreign bonds, of which 21% are inflation-linked, 30% are in government bonds, 38% are in corporates and the rest is in securitised debt.

In the 15% equity portfolio, at least 70% of assets will be in large-cap companies, 20% are in small-caps and the rest is in emerging markets.

Another 5% of its assets is in indirect real estate, 3% is in commodities indices and the remaining 30% is in cash and domestic debt.

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