Swiss pension funds’ commodities portfolios returned 11.31% in the second quarter and 26.72% year-to-date in 2021, according to Swisscanto Vorsorge’s Pensionskassen-Monitor published last week.

The returns on commodities, which achieved the best performance among all asset classes, resulted from an increase in prices of raw materials due to their temporary shortage.

According to the study, Swiss equities yielded 9.50% in the second quarter of this year and 15.15% year-to-date in 2021. Pension funds’s global equity investments returned 5.40% in Q2 and 17.50% so far this year.

Gains on Swiss and global equities led to pension funds continuing to further build their fluctuation reserves in the second quarter of 2021.

The private pension funds increased their reserves as a percentage of obligations by an average of 3.4 percentage points to 23.3%. The fluctuation reserves are currently above the average target of 18%, it said.

Among other asset classes, direct and indirect real estate investments in Switzerland returned 3.29% in the second quarter and 4.22% to date in 2021, while hedge fund allocations recorded a 2.13% return in the second quarter and 3.17% so far this year.

Swiss bonds performed negatively among all asset classes – -0.04% in Q2 and -1.25% so far this year. Global bonds recorded -0.50% in the second quarter and 1.23% so far in 2021, while global bonds hedged in Swiss francs recorded a 0.74% in Q2 and -2.07% in 2021.

Overall, Swiss pension funds returned 3.30% in the second quarter of this year and 7.13% year-to-date in 2021, according to the study.

Private pension schemes have reached a new high in terms of their estimated funding ratio with 123.3% at the end of June of this year, compared with 119.9% in March and 116.1% at the end of 2020.

The vast majority (99.3%) of the Swiss private pension schemes and all public, fully funded pension funds had a funding ratio of over 100% in June, with 85.9% of the private pension schemes that reached a coverage ratio of 115% or higher.

Fully funded public pension funds achieved a funding ratio of 115.8% at the end of June, compared with 112.9% in March and 109.2% at the end of 2020. Partially funded pubic pension funds had a funding ratio of 93.2% in June, up from 90.5% in March and 87.7% at the end of 2020.

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