SWITZERLAND - Home bias is back in fashion as Swiss funds are turning towards investments in Swiss francs, especially domestic bonds - details of the Credit Suisse Pensionskassenindex reveal.   Almost 77% of all assets of Swiss Pensionskassen are now denominated in Swiss francs - more than ever before.   "This increase was at the expense of the EUR (- 0.7%), the USD (-1.18 %), which interestingly lost ground in spite of its strength, and the GBP (- 0.07%)," Credit Suisse noted in the detailed analysis of their latest Pensionskassenindex. (See earlier IPE article: Swiss funds fall 1.6% in Q3)   A significant increase was also noted in investments in Swiss bonds as their share in portfolios rose by 1.65% to just under 28% compared to the end of June 2008.   While the maximum bond exposure in some funds had dropped by 10 percentage points to 55% over the last quarter, it is now back up to 60%.   That said, some funds still have as little as 5% in Swiss bonds.   For the first time in months Swiss bonds had outperformed domestic real estate holdings over the last quarter which might have influenced some funds' decision to reduce their cash position and invest in bonds. (See earlier IPE article: Bonds better than real estate - study)
   In total, cash positions were reduced from 7.9% to 7.7% over the last quarter and further money for new investments was drawn from foreign equities the exposure to which dropped by 1.21 percentage points to 14.3% on average.   The rest of the money was put into real estate and alternative investments, both of which reached new record highs of 17.4% and 5.15% respectively.   One year ago, the respective exposures had been 14.7% for real estate, 4.4% in alternative investments, 16.7% in foreign equities and 27.5% in Swiss bonds.   Both through changes in the market and changes to portfolios, the expected risk in portfolios is now 4.74% - the lowest since the record year of 2000 when the risk stood at 8%.

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