Pension funds achieve a return of 0.77 percent in the 2nd quarter
Published: Monday, Aug 5th 2024, 10:40
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Swiss pension funds continued to benefit from the positive sentiment on the financial markets in the second quarter of 2024. On average, they achieved a return of 0.77% on their investments, according to the latest Swisscanto Pension Fund Monitor.
Due to the euphoria on the markets in the first half of the year, which drove prices up, pension funds recorded an average gain of 6.6% from the beginning of January to the end of June. However, if the current slump on the stock markets continues, this performance is likely to be severely dampened in the third quarter.
In contrast, optimism still prevailed among investors in the second quarter: in its press release on Monday, Swisscanto writes that the positive sentiment at the beginning of the year also characterized the following months. The global stock markets benefited in particular from developments in the USA, where investor enthusiasm for artificial intelligence led to new highs in the indices.
In line with the positive development, the coverage ratios of pension funds have also improved further. According to Swisscanto, these climbed by 0.4 percentage points in the private-law funds in the second quarter, reaching an average of 120.0% at the end of June. All funds now have a coverage ratio of over 100 percent. For almost three quarters of the pension funds, the value is even 115% or higher.
The picture is also positive for the public funds. Both those with full capitalization and those with partial capitalization reported a slightly higher asset-weighted coverage ratio than in the previous quarter at 112.4% and 89.4% respectively as at the end of June, writes Swisscanto. However, the coverage ratio is still below 80 percent for almost three out of ten funds.
Swiss equities make the biggest contribution to returns
Looking at the individual asset classes, Swiss pension funds benefited greatly from the performance of Swiss equities. With an increase of 3.1% in the second quarter, they delivered the highest return contribution. The commodities asset class (+2.6%) and global equities (+2.5%) also recorded good growth. In the case of bonds, Swiss stocks recorded an increase of 1.3%, while foreign stocks fell by the same amount.
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