SWITZERLAND - Pensionskasse Energie (PKE), a CHF8.5bn (€5.1bn) pension fund for the energy sector, has reported a return on its assets of 9.7% for 2006 - well above the 6.9% industry average and the highest so far on record.

PKE said, in a statement, its return on assets for its business year ended March 31 2007 was 7.3% compared with 20.5% for the previous year.

The scheme attributed the strong performance to its equity holdings as well as indirect property investments, which returned 19% and 11%, respectively.

PKE had around 48% of assets invested in equities during its last business year - one of the highest exposures for Swiss schemes - and around 10% allocated to property, including funds and direct holdings in Switzerland.

"The performance of our assets is truly a cause for celebration. It should be said that while the performance is 70% due to our efforts, I would say that the other 30% was luck," Christoph Auckenthaler, PKE board member responsible for investments, told IPE.

PKE's remaining allocation was 25% in fixed income, 10% mortgage loans, and 3% alternatives.

Yet pension fund officials said in view of the risks currently emerging from the highly-valued equity markets, it would take measures to further optimise its asset allocation, including plans to conduct an asset-liability study with the support of PKE's investment consultant PPCMetrics, a well-known Swiss firm based in Zurich.

"One of the measures we will take is to adjust our equity exposure downwards, though let me stress that this is not related to the recent correction in those markets," said Auckenthaler.

"Unlike some other schemes, we don't have any plans to step up our investments in alternatives. We'll keep that ratio at around 3% for now," he added.

PKE also said while it expected another positive return for its current business year, this could be affected by the current volatility of financial markets.

PKE provides a pension to around 23,000 employees at 290 energy firms on a defined contribution basis.