● Pensionskasse Manor (Manor) is a hybrid pension scheme for employees of a Swiss family-owned corporate group, with 9,400 members and €1.8bn in assets. Mirroring the business, the pension fund has adopted an entrepreneurial approach to its investment strategy. It started reducing its bond exposure sharply in 2013 to its current level of 5.5% of assets. The proceeds have mostly been reinvested in alternative assets including private markets, hedge funds, private equity and infrastructure, with impressive results. The biggest component of the fund’s alternatives allocation is currently hedge funds (14%), followed by private equity (5%), infrastructure (3.5%) and gold (2.5%).

● The fund’s approach is probably closer to that of US endowments than to other Swiss pension funds. It considers that this divergence is courageous, but only possible with education, conviction and the full support of its board of directors. Over the past ten years, Manor has used its alternatives portfolio to build a fixed income proxy, with convincing results. Studies show this approach clearly pays, with solid net performance over this period. There has also been a very positive effect on Manor’s coverage ratio, which at 123.9% is among Switzerland’s highest.

● As a consequence, Manor was able to increase retirement benefits by 2% at the beginning of 2023, giving some protection against inflation. Over the past five years, active members have also received annual interest payments of 3.05% - a fair amount, given the negative interest rates in Switzerland over the period.

● Determined to avoid complacency, Manor is preparing a new asset/liability management study to reposition its strategic asset allocation. It does not intend to change its approach completely, but an increase in its fixed income allocation is a possibility.