Publica (CHF37bn Pension Fund) vs SMI Total Return, vs SMI Price Return, vs my clients, my mandates

Yesterday I was talking to a prospective client, who during the discussion become my customer. We were talking about investing, why it doesn’t make sense to hold cash if the money held is suppose to be for retirement.

To better explain to him what he should do with his money, we needed to look at how pension funds (money destined for members retirement), especially really well managed pension funds like the Swiss Publica pension fund, which manages over CHF 37 billion (!), invest (see graph 2).  Most of my clients have even larger risk tolerance towards volatility than a pension fund, so they invest over 90% in equities. The graph 1 shows that this has meant underperformance vs Publica in certain years, but that longer term (2005-2014 ; 9 years) the equity strategy (>90% equities) has performed better. This holds true for most periods you would compare, long term.

But as a starting point, as a discussion point, it’s great to look at how Publica invests. It’s also very easy to choose ETFs based on Publicas investment style. I’ll happily also discuss this with you, dear reader. Very important and impressive to see below: How much difference it makes if you have a Total Return index (orange), which is including dividends or just the Price Return (PR) without dividends (red).

publica-switzerland-assets-investments-2013-2014-vs-smi-index-vs-mandate-clients

As a starter you can see that Publica has close to 60% in bonds, virtually no cash, the rest being in equities (mainly global equities, only 3.25% Switzerland!), commodities and property. The Publica equity portfolio is worth over CHF 11 billion.publica-switzerland-assets-investments-2013-2014

 

Raw data:

Aktiven 31.12.13 31.12.14
Flüssige Mittel 95’496’710 88’199’403
Forderungen 112’957’535 111’665’871
Geldmarkt 921’274’624 902’208’419
Obligationen Eidgenossen 3’311’852’153 3’388’180’570
Obligationen CHF ex Eidgenossen 4’896’565’712 4’264’542’568
Staatsanleihen Industrieländer ex Schweiz 3’630’404’753 5’508’242’627
Unternehmensanleihen Fremdwährung 5’532’395’653 5’807’034’405
Inflationsgeschützte Staatsanleihen 0 1’279’854’337
Staatsanleihen Schwellenländer 1’469’941’708 1’795’717’194
Hypotheken Schweiz 177’593’503 174’157’435
Aktien Schweiz 1’228’404’017 1’222’926’830
Aktien Industrieländer ex Schweiz 7’238’977’923 6’382’965’626
Aktien Schwellenländer 3’134’254’827 3’032’771’754
Rohstoffe 1’788’097’956 1’188’474’928
Immobilienanlagen Schweiz 2’456’429’696 2’484’074’326
Vermögensanlagen 35’994’646’770 37’631’016’293

source raw data: https://www.publica.ch/_file/6218/geschaeftsbericht-2014-d.pdf

pubica-performance-pictet-bvg-indizes

 

anlagestrategie-pro-rata-nach-anlageklasse-sortiert-nach-zunehmendem-risiko-und-abnehmender-liquidität

Leave a Reply

Your email address will not be published. Required fields are marked *