Elo, the merged mutual pension insurance company of Finland’s Pension Fennia and Local Tapiola, is updating its strategic allocation and strengthening its in-house capabilities by reducing the number of managers this year.Pension Fennia and Local Tapiola merged officially on 1 January.The two firm’s combined investment portfolio is now worth €18.6bn.Some €8.15bn of this originates from Pension Fennia, which transferred its assets to the new entity at Local Tapiola, which was already managing a portfolio of €10.44bn. Hanna Hiidenpalo, CIO at Elo, told IPE the firm aimed to make its investment operations more effective over the current year.At the moment, more than 60% of the firm’s assets are managed in-house – the company invests in hundreds of funds.Prior to the launch of Elo, Pension Fennia had invested slightly more in external funds than Local Tapiola had.“We are now analysing our portfolio and scanning all the funds in which Elo’s assets are invested, inspecting how they match with our strategy,” Hiidenpalo said.“Our aim is to clarify the portfolio structure overall – and it is likely we will end up exiting some of the funds in the process.”Today, the lion’s share of Elo’s assets is invested in fixed income including credit-related investment (less than 40%) and equities (approximately 30%).The rest of the portfolio includes property (15%) and hedge funds (10%) and alternatives (5%).Some 30% of Elo’s assets are invested in Finland, but on the equities side home-region makes up one-third of the portfolio.The rest of Elo’s equities are invested in other EU stock markets (30%), the US (approximately 20%) and emerging markets (nearly 20%).Prior to the establishment of Elo, the investment portfolios of Local Tapiola and Pension Fennia were quite similar to one another in terms of overall asset allocation.The only notable difference was Pension Fennia’s slightly larger exposure to property – at 16.5% of all holdings, whilst Local Tapiola’s property exposure was 13.2%.“Our primary target in using funds is to complement our own operations and strategy and investment policy,” Hiidenpalo said.“Funds come into play in specific markets, industries and particularly challenging alternative strategies, where our team of some 50 investment specialists do not have notable long-term expertise.“This year, we want to make our operations more effective and focus on our core operations – investing and analysis. This is of utmost importance in a big organisation like Elo.”
The UK government has launched a consultation on the creation of two collective investment vehicles (CIVs) for the 89 local government pension schemes (LGPS) in England and Wales.The consultation was created following a call for evidence on the future of the LGPS, and independent analysis by Hymans Robertson, a consultancy that dominates advisory services to the LGPS.It proposed the creation of two CIVs for the funds, one to manage entirely passive investments in equities and bonds and one to actively manage alternatives such as private equity, infrastructure and property.The government decision to move towards CIVs comes after speculation it would propose one of three options, including the merging of local funds, or creating geographical CIVs. In a bold move, the government has proposed that funds shift all active listed equities and bonds into passive arrangements, via a new CIV.According to the Centre for Policy Studies, a right-leaning think tank, the funds jointly have around £85bn (€103bn) in active listed assets.The government cited analysis from Hymans Robertson that claimed funds would not have seen lower returns had assets been managed passively over the previous 10 years.The consultancy said the 89 funds would also pay £230m less in management fees in a passive-only CIV.Without taking into account any impact on returns, it also claimed asset turnover fees, for the buying and selling of assets, would have been £190m lower in 2012-13 under passive arrangements.Several funds, however, have defended their employment of active managers, arguing that it has provided outperformance of the market by 5.7% over the last three years.The government is to consult on how it will dictate to funds. It will consider forcing them to shift all active listed mandates to passive, forcing a percentage allocation, implementing a ‘comply or explain’ mechanism, or the status quo.Regarding the alternative asset CIV, the government said its creation would still allow asset allocation to remain at fund level, a critical point against mergers highlighted by respondents to its prior consultation.Hymans Robertson’s analysis showed the LGPS funds could save as much as £240m a year, within 10 years, by aggregating mandates.Schemes currently allocate roughly 10% of assets to alternatives, where it accounts for 40% of fees.The government criticised the heavy use of funds of funds – an expensive yet common way LGPS funds currently access alternatives such as private equity.It also said a CIV based on active alternatives management would allow the funds to further access infrastructure projects by pooling risk.Brandon Lewis, the Conservative minister responsible for the LGPS, said the move would reduce the unsustainable cost of public sector pensions.“The proposals I am setting out today will help reduce investment costs by £660m a year,” he said.Linda Selman, head of LGPS investments at Hymans Robertson, said CIVs might allow the funds to further reduce fees, and reduce the use of active management and funds of funds.“Active management still has an important role to play in accessing market opportunities but should be deployed selectively, when it adds value,” she said.“Ultimately, the balance between passive and active should depend upon the fund’s governance budget, investment beliefs and objectives, and the expected net of fee returns.”Gavin Bullock, pensions partner at Deloitte, warned of the potential impact on the UK asset management industry.“Both the move to pooling vehicles and the potential shift to passive will have a major impact on the UK asset management industry, given the £178bn assets currently under management by the LGPS,” he said.,WebsitesWe are not responsible for the content of external sitesLink to consultation on collaboration, cost savings and efficiencies among LGPS
“We will work to develop a minor in pensions for our many master students in finance and/or economics at CBS,” he said.These courses – and perhaps the minor – will also be available for masters students at other universities, Sørensen said.Funding has been pledged by the pensions sector to the tune of DKK2m per year for the first five years, and CBS will top this up with an extra 25%, or DKK500,000 a year, for five years.The centre aims to put on a “flagship” conference once a year, as well as workshops and possibly other activities to bridge ideas, knowledge and learning between practitioners and academics interested in pension issues, Sørensen said.The first flagship event will be held in June, focusing on the pension sector investing in a low interest-rate environment.Right now, this is one of the two main challenges Sørensen sees facing the Danish pensions industry, the other being the increasing number of people becoming pensioners who will need to sustain their level of living based on pension savings.The centre already has a number of research projects in progress, including one on forecasting stock returns for long-term investors, one on the implications of credit constraints on retirement saving decisions and another on the macroeconomic effects of longevity adjustment of the retirement age and pension benefits.The three directors – all professors at CBS – are Sørensen, Svend Erik Hougaard Jensen from the department of economics and Jesper Rangvid from the department of finance.“Other academics involved in the centre are mostly other researchers from the department of economics and the department of finance at CBS,” Sørensen said.“But there will also be a few academics from other universities – both in Denmark and outside Denmark – involved.”Besides Lærernes Pension and PensionDanmark, the centre’s list of sponsors from the industry includes ATP, Danica Pension, Industriens Pension, Nykredit Livsforsikring, Topdanmark, SEB Pensionsforsikring and Skandia Livsforsikring.Though the centre will work closely with the pension sector, including people working at pension funds and providers on its advisory board, Hougaard Jensen stressed it would maintain academic objectivity.“The cooperation with the pension sector is an essential part of PeRCent,” he said. “It provides us with a direct dialogue so we can coordinate our work with the sector continuously.“But, of course, we are not in the sector’s pocket, and the research we do is independent.”Torben Andersen, professor at Aarhus University – who is currently chairman of the Pension Commission in Denmark – will chair PeRCent’s advisory board.Other members of the advisory board are Peter Løchte Jørgensen, also a professor at Aarhus University; Susan Christoffersen, professor at the University of Toronto; Möger Pedersen; Brüniche-Olsen; Per Bremer Rasmussen, chief executive of industry association Forsikring & Pension; Danica’s chief executive Per Klitgaard; ATP chief executive Carsten Stendevad; and Laila Mortensen, chief executive of Industriens Pension. A new research centre on pensions has begun work in Copenhagen with DKK12.5m (€1.7m) in funding over the next five years, with the aim of increasing knowledge of the subject through research and helping develop the industry sector in Denmark.The Pension Research Centre (PeRCent) started up in January at Copenhagen Business School (CBS), having secured funding from the industry, as well as the business school itself.CBS professor Carsten Sørensen, one of the centre’s three leaders, told IPE: “We hope to provide excellent research output in the period so that the centre may continue receiving external funding from the pension sector in Denmark also, in continuation of this five-year period.”As well as producing this research, the centre will develop pension courses for CBS students.
The €25bn Pensioenfonds ING saw its financial position improve over the last quarter due in particular to the 3.7% return on its 71% fixed income holdings.This more than offset the 5% loss on its return portfolio with its remaining assets, leading to a positive overall return of 1.1%.Moreover, because the quarterly rate for inflation was lower than expected, the scheme’s funding in real terms increased by 1.5 percentage points to 93.2%.Its official policy coverage – the average funding of the previous 12 months, and the criterion for indexation and rights cuts – remained at more than 140%. The ING scheme said real estate returned 1.5% over the last quarter and 11.8% year to date. In other news, the €17.3bn Philips Pensioenfonds reported a quarterly loss of 1.6%, taking its cumulative result for the year to 0.1%.It attributed the performance to “significant losses” on equity, commodities and emerging market debt.As a result of the loss and falling interest rates, its actual funding fell by 6.3 percentage points to 107.7%.The policy coverage, which also fell as a consequence, stood at 112.6% as of the end of September.Elsewhere, the €3bn Pensioenfonds TNO said it lost 1.1% during the third quarter but that the loss was limited by the 0.3% return on its combined hedge against interest and currency risk.The scheme said quarterly returns varied widely, with local currency-denominated emerging market debt losing almost 10%, whereas US high-yield investments returned 7%, “due in part to the appreciation of the dollar relative to the euro”.It said an 8.6% return on Japanese equity was in stark contrast with an almost equally large loss on equity from Hong Kong, Singapore, Australia and New Zealand.The scheme’s performance over the first nine months was nearly 1.3%.The Pensioenfonds TNO closed the quarter with a policy funding of 112.5%.Lastly, SPW, the €10.5bn pension fund for Dutch housing corporations, reported a quarterly loss of 1.7%, which included a 1.4% return on its extensive interest hedge.The sector scheme said it lost 17.5% on emerging market equities and 19.7% on commodities.It also reported loss of 8.8% on developed market equities and 7.2% on emerging market debt.Private equity, infrastructure and property were the best-performing assets classes, producing returns of 12.5%, 11.5% and 8.9%, respectively. Hedge funds have generated 10.1% since January, according to the pension fund, which reported an overall return of 0.3% over the period.
Healthcare scheme PFZW netted strong returns from commodities in Q2Credit: Darko Stojanovic The healthcare scheme attributed the 1.1% profit on government bonds to a combination of falling interest rates on Dutch and German government paper, market uncertainty, and investors’ expectations that interest rates would not rise soon.PFZW’s inflation-linked bond (ILB) allocation, which returned 7.7%, benefited from a drop in real interest rates and an expected inflation increase.Results within PFZW’s credit portfolio ranged from a 1.4% gain for residential mortgages to a 5.7% loss for local currency emerging market debt (EMD).ABPFunding at the €414bn ABP recovered by 0.9 percentage point to 103.9% on the back of a quarterly return of 2.3%.The civil service scheme said the chances of a benefit reduction next year were almost zero, but warned that a discount would be inevitable if its coverage was still short of 104.2% at 2020-end.ABP gained 7.1% from developed market equity but lost 3.7% on emerging markets. It also incurred small losses on ILBs, EMD and government bonds.The scheme’s credit investments delivered 2.6%, and it also made a profit on commodities (10.7%), private equity (8.4%), infrastructure (5.5%) and hedge funds (7.2%).It added that its combined interest rate and inflation hedge had generated a 0.2% gain. In contrast, it lost 1.7% on its currency hedge.PMT and PME The five largest pension funds in the Netherlands saw their coverage ratio improve by up to 2.9% during the second quarter.However, all five said their recoveries were slowing down, and most have warned that benefit cuts were still possible if funding did not increased to more than 104% by 2020.Quarterly figures, presented today, showed that only BpfBOUW, the €58bn pension fund for the building sector, was well out of the danger zone.With a 2.9% gain, the €203bn healthcare scheme PFZW achieved the largest profit in the second quarter, but was also facing the longest way to recovery. Its funding improved by 0.8 percentage points to 100.8%, but has to rise to at least 104.3% before the end of 2020 in order to avoid reduce pension payments, said Peter Borgdorff, the scheme’s director.PFZWPFZW gained most on its return-seeking investments (2.3%), with commodities alone yielding 13.1%, largely due to rising oil prices.Its equity exposure delivered 1.8%, while private equity, property and infrastructure generated 2.5%, 4.7% and 1.9%, respectively. Metal industry schemes PME and PMT profited from equities in the second quarterIn part due to a quarterly return of 1.7% in Q2, the €72bn sector scheme for metalworking and mechanical engineering (PMT) saw its coverage ratio improve to 101.9%.It attributed the result in particular to its return portfolio, with equity and property the best performing asset classes. However, it said it had lost money on high yield, due to widening credit spreads.PME, the €47bn industry-wide scheme for metalworking and electro-technical engineering, reported a quarterly gain of 1.5% and said its funding ratio had improved to 101.4%.It credited the return largely to gains on equity (2.9%), property (2.3%) and alternatives (4.2%).With a funding of 117.7%, BpfBouw is still in the best financial position of the five largest Dutch schemes. Its investments returned 2.1% during the past quarter, in part thanks to a 0.3% result on its interest hedge as well as 9.3% from its alternative investments, including commodities.
Swiss asset manager Lyxor has listed a new exchange-traded fund (ETF) focused on companies in the robotics and artificial intelligence (AI) sectors.The fund’s portfolio has been built based on the work of parent company Société Générale’s (SocGen) thematic research team, as well as that of Martin Ford, a futurist and author.The Robotics and AI ETF invests in 150 stocks selected by SocGen’s big data process based on research and development expenditure, net sales, return on invested capital, and three-year sales growth.Lyxor claimed the “bespoke” approach meant the fund included companies making use of robotics or AI technology in their businesses, and not just those creating the technology or its components. Data company Statista has estimated that companies in the robotics and AI sectors could generate revenues of as much as $90bn (€77bn) by 2025.The ETF is listed in the UK, Germany and Italy and has a total expense ratio of 0.4%.Invesco’s S&P-based communications ETFMeanwhile, Invesco has listed a new ETF on the London Stock Exchange focusing on the communications sector of the S&P 500 index. It covers 26 stocks including technology giants Facebook, Netflix, Twitter, and Alphabet (Google’s holding company).The launch reflects the decisions of index providers S&P and MSCI to amend their company definitions. For S&P, this has meant reassigning companies from the consumer discretionary and technology sectors to the new communications category.The fund is the 11th in Invesco’s range of ETFs tracking specific S&P sectors. It has an annual ongoing charge of 0.14%.TOBAM to cut carbon footprint across fund rangeFrench asset manager TOBAM has adopted a carbon reduction policy for its main portfolios, aiming to cut its footprint by 20%.The strategy applies to its “anti-benchmark” equity funds and “maximum diversification” indices, according to a statement from the fund manager.Founder and CEO Yves Choueifaty said the company’s research had shown that reducing its carbon footprint would “not significantly affect the risk/return profile of our approach” or its portfolios’ diversification.“We believe that the capability to customise as well as add specific filters and/or constraints without impacting the nature of our investment philosophy is a core quality of the maximum diversification approach,” he added.Asset management acquirer adds to portfolio with liquid alts buyIM Global Partner, a French distribution group for asset managers, has acquired a 45% stake in liquid alternatives specialist Dynamic Beta Investments.The deal marks IM Global Partner’s fourth acquisition, following its purchase of stakes in US-based equities manager Polen Capital, corporate bond specialist Dolan McEniry, and global equities investor Sirios Capital Management.Dynamic Beta is based in New York runs a long/short fund-of-funds, and managed futures strategy, and a multi-asset absolute return fund.Mathias Mamou-Mani, head of risk management at Dynamic Beta, said: “Extensive research on hedge funds proves that most or all pre-fee returns of hedge funds can be captured through dynamically-adjusted portfolios of market instruments.“This validates our position that fee reduction can generate meaningful alpha for our clients.“We are excited to work with IM Global Partner to introduce our investment solutions to a broader range of investors.”
Sweden’s financial regulator, Finansinspektionen (FI), has called on investors clearing derivatives through London to prepare for their counterparties to be considered unauthorised after the UK leaves the EU in March.With less than six months to go until the UK’s departure from the union, and still no agreement on how the break would happen, it was currently uncertain what status derivatives clearing services such as LCH would have after Brexit, FI said. More than 90% of interest-rate derivatives denominated in Swedish kronor are currently cleared by LCH.The regulator said: “Against this background, FI calls on companies that directly and indirectly conduct clearing at LCH to prepare for a scenario where LCH does not become an authorised central counterparty after Brexit.” LCH becoming a third-country player in the case of a possible ‘hard’ Brexit was identified as “the single most important consequence” of the split in this context, the regulator said.“When LCH becomes a third-country player, Swedish companies can no longer use LCH for clearing new OTC derivatives with clearing requirements,” it said.On top of this, there was also uncertainty surrounding requirements for contracts that had already been agreed.“An altered status for LCH can thus cause inconvenience and additional costs for the Swedish banks,” the regulator said.FI recommended that investors assess the likely consequences for liquidity and solvency, and take capital and liquidity planning into account.Companies should also consider whether their business models and strategies would be affected by this and what measures needed to be taken to manage potential adverse effects, FI said.Regulators in the Netherlands and the UK have highlighted the derivatives sector as one of the most likely to be affected by Brexit.Last year, Cardano warned that a ‘hard’ Brexit could cost pension schemes hundreds of millions of euros if it shuts them out of London’s derivatives sector.The European Parliament’s chief Brexit spokesman Guy Verhofstadt recently warned that some UK financial products would become unavailable to EU investors after Brexit.However, UK and EU regulators have sought to reassure investors and co-operate on agreements to keep markets open.
The pension fund also said it extended its private debt programme to 4.5% of the total fund with the award of four new mandates, including a first strategic allocation to real estate debt.According to the fund’s report the year under review also saw it finish a review of its direct investment portfolio, agreeing changes such as an increase in its overall capacity and in the target size of individual investments.As at the end of March the commitments in the direct investment portfolio made up 5% of the total fund, with the permissible range of 2.5-7.5%. The target investment size is £20-100m, with a minimum of £10m and a maximum of the greater of £200m or 1% of the total fund value.Infrastructure, renewable energy and credit commitments make up the bulk of the direct investments portfolio.Lothian rejigs allocation categoriesLothian Pension Fund, Scotland’s second largest LGPS with assets of £7.8bn, has changed the way it expresses its strategic asset allocation following a review of its investment strategies.The investment strategy used to be set at the broad asset class level of equities, index-linked gilts and alternatives, but the number of “policy groups” has been expanded from three to five: equities, gilts, non-gilt debt, real assets and cash.The strategic allocation was broadly unchanged, however, it said in its unaudited annual report.Last year the Scottish LGPS Advisory Board launched a consultation on possible structural reform of Scottish local authority pension funds, and Lothian said the prospect of this was “the most significant possible development” affecting it.In contrast to Strathclyde, Lothian came out in favour of structural change. The latter has an authorised internal asset management company that it shares with the schemes for two nearby local authorities.In its unaudited report for 2018-19, Lothian said partner funds were benefiting from its internal resources and it was sharing its costs, but there was not yet any significant impact on any of Lothian’s investments.“The arrangements are expected to evolve and for Lothian to benefit from greater overlap in investments,” it added. “The governance of Lothian’s collaborative arrangements is not straightforward. While other funds rely on advice from Lothian, they need to continue to be resourced appropriately to make decisions for their respective funds.“Further, there are practical constraints to the expansion of this type of collaboration.”Both Strathclyde and Lothian reported for the first time in their annual reports on their approach to climate change using the framework recommended by the Financial Stability Board’s Task Force on Climate-related Financial Disclosures. Investments made by Strathclyde Pension Fund, Scotland’s largest local authority pension fund and the UK’s second biggest, gained 5.9% in the year to the end of March for a “remarkable” 10th consecutive year of growth, according to its unaudited annual report.Returns were largely driven by the equity markets, the £21.9bn (€24.4bn) local government pension scheme (LGPS) noted. It gave its estimated funding level as 109%.Over the past few years the pension fund has been reducing its equity allocation in favour of a more diversified portfolio, and it reported agreeing at least £1bn of new investments during the 2018-19 financial year.These included £200m in an absolute return fund, £500m in global infrastructure, and seven investments with a total value of £205m by Strathclyde’s direct investment portfolio, its vehicle for alternative and local investments.
He added that the trade war between the US and China also seemed to be subsiding, which was helping global markets generally.The asset owner has seen good performance across high yield bonds, emerging market debt and equity overall, however, it doesn’t expect numbers of the same magnitude for 2020, Fawcett said. NEST, the UK’s largest master trust with assets worth £9.6bn (€11.4bn), will continue adopting a cautious stance regarding its investment strategy, even though it has seen a positive year as returns for all its major asset classes posted positive returns during 2019.Mark Fawcett, chief investment officer at NEST Corporation, the master trust’s trustee body, said: “Our current stance is on the cautious side, making sure we have enough exposure to growth assets that will continue to deliver strong returns.”He told IPE its US equities had been its strongest developed market on returns – NEST holds tech shares in companies such as Amazon and Google, which have a major impact on the global economy.He said the positive returns were driven by an accommodative Federal Reserve stance and the fourth quarter saw a final tailwind come through as markets welcomed signs of economic stability. Source: NEST CorporationOver the last five years, NEST’s sharia fund has seen a cumulative performance of 95.7% as of end of December 2019, while its ethical growth and higher risk funds have returned 66.8% and 64.6%, respectively.Long-term diversificationNEST receives more than £400m a month in member contributions and is forecasting £20bn in asset under management by 2022.With a forecast to almost double its assets in the next couple of years, it is imperative that the trust avoids short-term asset allocation changes, and focuses on a long-term strategy, while also keeping an eye on market risks, Fawcett explained.The investor has a low equity allocation (55%), he said, compared to other master trusts, which hold around 80-90% of their assets.“We’ve made use of this lower risk profile and use the rest of our assets for a well diversified portfolio, which is likely to work out well over the next few years, as we see the economic cycle peak,” Fawcett added.The CIO sees investment opportunities in renewables, infrastructure debt and equity – it launched a tender last month seeking unlisted infrastructure equity managers in a bid for further portfolio diversification.He also said NEST has already started funding its first private credit projects – which included wind and solar farms in Europe and is also looking for opportunities in the US.“If growth underwhelms, public financial markets are likely to struggle to achieve the stellar returns seen in 2019”Mark Fawcett, CIO at NEST CorporationThe trust received authorisation last month from the Financial Conduct Authority (FCA) to form NEST Invest as an Occupational Pension Scheme (OPS) firm, which will help implement more sophisticated ways of investing on behalf of its members.Looking ahead, economic expansion is expected to continue, though significant geopolitical risk remains, Fawcett said. “Markets must wait for UK-EU trade talks, the US presidential election, whether the ‘Phase One’ [trade] deal will hold and whether the tension in Middle East will escalate.”He said: “If growth underwhelms, public financial markets are likely to struggle to achieve the stellar returns seen in 2019. Our caution is a significant factor in seeking investment returns in alternative areas such as private credit, which we recently added to our portfolio.”Responsible investmentFawcett told IPE that one of the key factors to drive NEST’s asset allocation is the increased focus on climate change and the need to transition to a low carbon strategy.NEST has published its fourth annual responsible investment report, ‘Paving the Way’, which outlines the trust’s work on integrating environmental, social and governance (ESG) factors into its investment approach, engaging with companies and other stakeholders and communicating with its members.“We included our key highlights through the year such as the several letters we wrote to companies listed on the FTSE100 urging them to become accredited Living Wage employers,” he said, adding that it has also joined Climate Action 100+.The trust has also co-authored and published a report late last year with RPMI Railpen on cyber security, which Fawcett hopes will act as a guide for asset owners on integrating cyber security considerations in their investment approach.NEST facts£9.6bn assets under management0.3% annual management charge/total expense ratio1.8% contribution charge8.8m members
The decline of the value of fixed assets led the WTW pension index to drop below 100% for the second time in three years, according to the consultancy. The negative investment return in the first quarter largely offset the excellent investment performance developments in 2019.WTW’s pension fund index gives an indication of how the general funding position under International Accounting Standard 19 has changed from quarter to quarter.Valentine said Swiss schemes were well diversified compared with other countries, with their relatively low equity exposure that provides a degree of downside protection.Pension funds were likely to have to revisit their ALM studies due to the coronavirus crisis, with its financial impact and uncertainties, changing the perception of future risks and how to manage them: “In the light of these changes, it will be necessary to revisit the assumptions underlying a pension scheme’s existing investment strategy,” said Valentine.WTW estimates that the wholesale closure of businesses will result in an immediate drop in real GDP in the US and Europe of 10-13% by the end of June, more than double that the fall recorded during the crisis in 2008/9, which stood at around 5%.Valentine added: “To simplify greatly, asset risk premia are higher and risk-free rates are lower and this has implications for investment strategy.”WTW recommended that pension funds have a long-term investment view by diversifying exposure to risk premia.“The current crisis poses potential shorter-term challenges relating, for example, to rebalancing and meeting immediate liquidity requirements,” said Valentin, adding that for this reason, engaging in efforts to “call the market” was not advisable. The funding level of Swiss corporate pensions schemes dropped seven percentage points in the first quarter of this year to 98%, compared with 105% at the end of last year, according to Willis Towers Watson’s latest pension index for the country.“This was a less severe drop than an asset-only view would have produced, thanks to a compensatory pick-up in corporate bond yields used to value the liabilities,” Michael Valentine, investment consultant at Willis Towers Watson Switzerland, told IPE.Swiss pension funds had a solid starting position earlier this year, but successive fluctuations in the market meant a loss of around 75% of the return on assets generated in the previous year, according to WTW’s Swiss pensions finance update.The COVID-19 crisis had negative effects on the pension positions on Swiss companies’ balance sheets.