The favourable trend for Swiss pension funds continued in the third quarter. According to the Swisscanto Pension Fund Monitor, the average investment return achieved in the months from July to September was 1.2 percent. Since the beginning of the year, the average return has even reached 7.7 percent.

This is due to the «solid performance in the majority of asset classes» the authors write. «Despite several phases of increased volatility in the third quarter of 2024, the financial markets continued their slight upward trend in the reporting period»

Increase Despite Uncertainties

Factors influencing the market include the escalating geopolitical unrest, the elections in France and the UK and the first precursors to the US presidential election. The interest rate policies of the US Federal Reserve and the European Central Bank have also caused a stir. «However, the situation quickly calmed down again with the interest rate cuts that were decided»

Looking at the individual asset classes, only commodities posted a negative return in the third quarter (-5.5 percent). Global bonds (hedged in Swiss francs) led the way with +3.1 percent, followed by Swiss franc bonds (2.2 percent). Swiss equities (2.0 percent) and Swiss real estate direct and indirect (2.1 percent) were also clearly positive.

(Graphic: Swisscanto)

Since the beginning of the year, both global equities (+20 percent) and Swiss equities (11.5 percent) have put in a very strong performance, and all other asset classes also posted positive returns.

Coverage Ratios Further Increased

The higher returns also had an impact on the cover ratios. According to the ZBK subsidiary, these improved by a further 0.7 percentage points over the course of the quarter for the private-law funds, reaching an average of 120.7 per cent. More than three quarters of the funds have a coverage ratio of over 100 percent.

(Graphic: Swisscanto)

The asset-weighted coverage ratios of the public-law funds also increased. A value of 113.0 percent was calculated for those with full capitalisation and 90.1 percent for those with partial capitalisation.