SWITZERLAND – Swiss pension funds have continued to cut their allocation to domestic bonds and equities, according to a report from Credit Suisse.

“Combined, Swiss bond and equity holdings have decreased by a total of 8.3% in two years, from 52.30% to 44.0%,” the bank said in its nine-page Swiss Pension Fund Index for the first quarter.

It said: “After the slight increase in liquidity holdings at the end of 2005, this element has now decreased by 0.3% to 7.1%.”

Swiss bond holdings have fallen by around 2%, while the proportion of Swiss equities has fallen for the eighth quarter in succession, falling by 0.2% in the period under review and by 2.6% over the last two years.

By contrast, the proportion of foreign equities rose by 0.6% to 18.1%, resulting in a total rise of 3.2% over the last two years.

There was virtually no change in the proportion of real estate and alternative investments, while the proportion of mortgages had increased “fairly dramatically” to 4.5%.

Credit Suisse, basing its findings on global custody data, said Swiss pension funds increased second-pillar assets under management by CHF14bn to CHF590bn in the first quarter.

Strong financial markets mean the index could surpass the minimum rate of return in the third quarter, for the first time since 2001.

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