Pension funds benefit from continuing upward trend on the markets
Published: Friday, May 3rd 2024, 09:10
Retour au fil d'actualité
Swiss pension funds continued to benefit from the ongoing upward trend on the financial markets in the first quarter of 2024. This was a continuation of an already successful 2023. However, the euphoria has now subsided and given way to increasing uncertainty.
The financial markets started the new year in high spirits and reached historic highs worldwide over the course of the first quarter. The party mood was also fueled by the Swiss National Bank (SNB), which was one of the first G10 central banks to cut interest rates in March. According to the Swisscanto Pension Fund Monitor published on Friday, this resulted in an average yield of 5.8%.
Coverage ratios improved
In line with the positive development, the coverage ratios have also improved further and are close to the highs of 2021, according to the report. For private-law pension funds, they currently stand at 119.6%. In comparison: at the end of 2023, they stood at 114.9%.
According to the report, all pension funds benefited from the strong performance on the financial markets in the first three months - in particular the pleasing price gains in equities. This is also reflected in the marked improvement in coverage ratios: "While 49% of private-law pension funds still boasted a coverage ratio of over 115% at the end of 2023, this figure had already risen to 72% by the first quarter of 2024." Almost all funds have now reached the 100 percent mark, with only 0.2 percent still underfunded.
The fully capitalized, public-law funds also proved to be significantly more robust. According to the figures, all of them have a coverage ratio of at least 100 percent.
Equities achieve strongest returns
Looking at the individual asset classes, global equities in particular rose by 16.6%. At +6%, the rise in Swiss equities was much more moderate.
In the case of bonds, currency hedging did not pay off for once, as shown by a return of -1% on global bonds with currency hedging in Swiss francs. In contrast, the class without currency hedging rose by 4.8 percent. Finally, commodities made a remarkable recovery, rising by 9.4 percent.
Euphoria verpufft
While hopes of further interest rate cuts by other central banks drove the financial markets in the first few months, a certain disillusionment has now set in.
Stubborn US inflation figures already caused uncertainty on the markets in April and hopes of interest rate cuts have receded. The US Federal Reserve is now even expected to cut interest rates less than twice this year. In addition, the geopolitical situation remains tense, which could lead to distortions on the markets.
©Keystone/SDA
French 
English 
German 
Spanish 
Arabic