Swiss pension funds are reassessing the role of equities in their portfolios as they contend with low domestic interest rates, higher global inflation expectations and increasing concentration risks in developed and emerging market indices, according to investment consultants.
Stephan Skaanes, chief executive officer at consultancy PPCmetrics, told IPE that the low-interest-rate environment in Switzerland has made real assets, and equities in particular, increasingly attractive for pension funds.
“The search for returns and value preservation leads to the fact that equities play ‘a key role’ in the portfolios of Swiss pension funds,” he said.
Typically, Swiss pension funds divide their equity allocations across four main segments: Swiss equities, global equities, emerging market equities and global small-cap stocks.
“This broad diversification forms the backbone of the equity allocation and remains of central importance, both now and for the future,” Skaanes said.
Strategies for equity investing remain largely unchanged, continuing to rely on long-term investment horizons and diversification, he added.
Andreas Rothacher, head of investment research at consultancy Complementa, told IPE that equities remain the main source of returns for pension funds, while also accounting for most portfolio volatility.
“This is in the context of low interest rates in Switzerland and, globally, higher inflation expectations,” he added.
According to Rothacher, pension funds could further increase equity allocations if they have sufficient risk-bearing capacity and fluctuation reserves to absorb market volatility.
Recent annual reports suggest some schemes are moving in that direction.
Bernische Lehrerversicherungskasse (BLVK), the CHF9.2bn pension fund for teachers in the canton of Bern, increased its equity exposure by around CHF300m year on year in 2025 to CHF3.55bn, according to its 2025 financial statements.
The share of Swiss equities in BLVK’s portfolio rose from 11.4% to 12.8% of total assets of CHF9.7bn.
The fund also appointed Zürcher Kantonalbank (ZKB) as a new manager for its global equity portfolio alongside Pictet and UBS.
Meanwhile, Basellandschaftliche Pensionskasse (BLPK), which invests around CHF4bn in Swiss and global equities, has also reviewed its investment strategy, slightly increasing its equity allocation to take on additional risk.
Diversification conundrum
The five largest Swiss-listed companies – Roche, Novartis, Nestlé, UBS and ABB – account for around 16% of the average Swiss pension fund’s equity portfolio. By comparison, the five largest holdings in global equity portfolios – Nvidia, Apple, Alphabet, Microsoft and Amazon – represent around 10%, according to an analysis of portfolio concentration published by UBS.
The relatively high weighting of Swiss equities contrasts with the widespread perception among pension funds that concentration risk is primarily driven by US technology stocks, the analysis noted.
Swiss pension funds continue to invest heavily in US equities, but concentration risks and, in some cases, valuations are prompting more discussion about the balance between global, emerging market, Swiss and small-cap equities, according to Skaanes.
“In some instances, allocations are being slightly adjusted in favour of emerging markets, Swiss equities, or small caps to achieve better risk diversification,” he added.
Around two-thirds of Swiss pension funds’ equity allocations are invested abroad, typically through the MSCI ACWI Index, which includes emerging markets, or the MSCI World Index, which excludes them, Rothacher said.
As of the end of June, the US accounted for around 64% of the MSCI ACWI Index and 72% of the MSCI World Index.
“The US is therefore heavily represented in the underlying investment universe, while the technology sector’s weighting is particularly high in emerging markets, even higher than in the global index,” Rothacher added.
Complementa is not seeing significant shifts in regional allocations overall, although some pension funds have adopted the MSCI World Equal Weighted Index, under which the US accounts for around 42% of the index and technology stocks around 11.5%, he continued.
“This has occasionally come at the cost of performance, and no long-term excess return over the market-cap-weighted approach is to be expected, though outperformance is possible during certain phases,” according to Rothacher.
Other pension funds are evaluating quantitative or active equity strategies, he added.
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