SWITZERLAND - The CHF2bn (€1.7bn) financial aid package for the canton of Zurich's pension fund (BVK) has been passed by the regional parliament, but now possibly faces a referendum.

The CHF21bn fund - which will be released from state control in 2014 - has struggled with falling funding levels and threats by members to abandon the scheme. 

The regional parliament, or Kantonsrat, has voted in favour of a CHF2bn cash injection, with only one delegate opposing the move.

The conservative SVP party, however, has threatened to put the payment to popular vote.

It will have until 12 June to mobilise the support needed to trigger a referendum.

The regional parliament, in its most recent vote, linked the earmarked BVK cash payment to a positive outcome for the referendum, should one be held.

In other news, Swiss first-pillar fund AHV has said that the restructuring of its portfolio has necessitated the tendering of a number of new mandates.

The latest is a mandate for an active, Swiss, small and mid-cap equities manager for a CHF60m portfolio, benchmarked against the SPI Small and Middle Companies.

The AHV said it expected fund managers to outperform the benchmark by an average of 300 basis points, net of all fees, per year, over a four-year cycle.

Lastly, some disagreement has arisen over the popularity of so-called COSIs - a new collateralised investment structure - among Swiss institutional investors.

According to banking group Vontobel, these "collateral secured instruments", which are listed on the Swiss stock exchange, have "surprisingly" seen more interest from institutional investors than from retail ones.

Heiko Geiger, head of public distribution for Germany, said: "We would have expected institutional investors to be aware of the issuer risk and be prepared to take it, but many investors in Germany and Switzerland are choosing this collateralised product."

Geiger said interest had come mainly from small to medium-sized investors.

However, Edouard Stucki, a board member at Towers Watson Switzerland, said he saw no real trend regarding collateralised vehicles.

"They all have a pre-defined payout, and a Pensionskasse has to question whether this payout scheme fits its investments, and if it can find a spot for it in its portfolio," he told IPE.

He added that, as with most structured products, there was always at least a small risk regarding the issuer.

He also pointed out that it was "very difficult to pop the hood" on such vehicles.

"Therefore, many institutional investors are rather looking to set up their own investment structures," he said.

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