Swiss pension funds made an average return on investments of 6.6 per cent in the first half of 2024, according to Swisscanto.

Its Swisscanto Pensionskassen Monitor, said the return for the first half of the year has been “very encouraging”. In particular, global equities and commodities, with double-digit growth rates, as well as Swiss equities, with +9.3 per cent, contributed significantly to the positive performance of the funds.

However, Swisscanto noted that the average return figure of 6.6 per cent is “somewhat overstated” due to the performance of unlisted investments such as private equity.

“The methodology is currently being adapted and will provide even more accurate figures in the future…. The asset-weighted return of all pension funds for this period is 6.6 per cent, the unweighted return is 6.3 per cent. The return of each pension fund is extrapolated based on index returns. The calculations are based on the pension funds' asset allocation as at 31 December 2023 and assume that no significant changes have been made to the allocation since then,” the report explained.

Despite strong half-year results, the return for the second quarter was 0.8 per cent, compared with 5.8 per cent in the first quarter, with the largest contributor being Swiss equities with 3.1 per cent, and commodities and global equities, with 2.6 per cent and 2.5 per cent, respectively.

By contrast, the performance of bonds was mixed: while Swiss bonds generated a return of 1.3 per cent, global bonds were down 1.3 per cent (–0.9 per cent after currency hedging).

Swisscanto’s report stated that markets were “no longer able to build on the euphoria of the first three months” of 2024.

Regarding funding ratios, the average asset-weighted coverage ratio of private pension funds stood at 120 per cent, an increase of 0.4 percentage points. A similar picture was also seen in the public sector funds. Both those with full capitalisation and those with partial capitalisation showed a slightly higher asset-weighted coverage ratio than in the previous quarter, at 112.4 per cent and 89.4 per cent, respectively, as of the end of June 2024.

All private pension funds now have a funding ratio of over 100 per cent, and almost 74 per cent of providers even have a ratio of 115 per cent or more. The fully capitalised public pension funds have also made significant progress: half of the funds now have a funded ratio of at least 115 per cent. The number of providers with a coverage ratio of over 90 per cent or 100 per cent has also increased for both partially capitalised pension funds. However, 29.4 per cent of the funds – the same number as in the previous quarter – are still below 80 per cent.

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