The funding ratio of Swiss private pension funds increased in June, setting a new record high of 123.8 per cent, according to the latest Swisscanto Pension Fund Monitor.

It marks the highest level since data collection began in 2000, breaking last month's record, and was attributed to gains in both equity and bond markets.

In addition, public-sector pension funds with full capitalisation reported a funding ratio of 117.6 per cent, while partially capitalised schemes rose to 94.5 per cent. Both also reached new all-time highs.

Overall, pension funds delivered an average return of 1.2 per cent (equally weighted) in June, bringing the year-to-date performance to 4.5 per cent.

Swiss equities were the strongest-performing asset class during the month, significantly outperforming international peers. Swiss bonds, foreign bonds and real estate also ended the month in positive territory, contributing to overall portfolio gains.

Commodities were the weakest-performing asset class in June, as prices declined following a stabilisation in geopolitical tensions in the Middle East, Swisscanto stated.

Furthermore, it noted that oil prices fell back towards pre-war levels after a framework agreement between the US and Iran.

At the same time, US inflation expectations eased, following a more hawkish tone from new Federal Reserve Chair Kevin Warsh.

US equities cooled slightly in June (in USD terms), while Swiss equities recorded a particularly strong month.

Looking ahead, Swisscanto said it does not expect further US Federal Reserve rate hikes for now, despite market pricing suggesting otherwise.

With corporate earnings growth remaining robust and the economic cycle regaining momentum, the outlook for equities remains constructive, particularly for cyclical sectors, Swisscanto stated.

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