An alternative strategy within a corporate approach
“A very well-defined alternative asset strategy. One has to admire the entrepreneurial philosophy that has delivered positive results for its small number of pensioners” judge’s comment
WINNER
Country |
Switzerland |
Type |
Hybrid corporate pension fund |
Members |
5,656 active, |
Assets |
€1,818m |
Performance |
–4.98% (1yr) |
As at 31 December 2018 |
● Pensionskasse Manor (Manor) considers itself somewhat unique compared to a traditional average Swiss Pension Fund. It is the pension fund of a family-owned retail group, Manor, and as such pursues an entrepreneurial approach in its investment strategy. It began reducing its bond exposure in 2013 and this now accounts for just 5.5% of its assets.
● The beneficiaries of this divestment strategy are Manor’s alternatives and private markets portfolios, which include assets classes such as hedge funds, private equity and infrastructure. This has been a successful transition and the current diverse strategic asset allocation is as follows:
- 3.5% cash
- 3.5% Swiss bonds
- 2.0% foreign bonds
- 5.0% Convertibles
- 11.0% Swiss equities
- 16.0% foreign equities
- 14.0% hedge funds
- 5.0% private equity
- 3.5% infrastructure 2.5%
- gold 3.0%
- mortgages 21.0%
- Swiss real estate 10%
- foreign real estate
● Performance over the last 10 years has been solid and ranked in the top quartile. This has had a very positive effect on our coverage ratio, which at 123.9% is also ranked among the top in the Swiss pensions sector.
● Other outcomes include a 2% increase at the beginning of 2023 in the level of member retirement benefits while implementing further inflation protection measures. In addition, it has paid an annual interest payment to active members of 3.05% for the past five years, despite a negative interest rate environment in Switzerland during this period.
● Not one to rest on its laurels and be complacent, Manor is preparing an ALM study with the aim of analysing and repositioning its strategic asset allocation. While its central approach based on a high alternatives and private markets exposure will remain in place, it is looking into the benefits of increasing its fixed income allocations based on both quantitative and qualitative analysis.
STRATEGIC TAKEAWAYS
➤ Entrepreneurial approach driving reduced bond exposure since 2013 |
➤ Diverse strategy based on high alternative and private market allocations |
➤ Solid funding ratio and increased payouts and interest payments |
HIGHLY COMMENDED
Country |
Spain |
AUM* |
€6,396m |
Performance) |
–7.61% (1yr) |
As the largest pension fund in Spain, Pensions Caixa 30 acts as a role model for smaller ones, since it has actively pursued the raising of standards, such as reducing its carbon footprint by 29% for total portfolio emissions for 2022, while consistently obtaining better than its competitors’ returns. When it merged with the more conservative Bankia pension fund in 2022, the equity portfolio was temporarily hedged, resulting in superior performance because of market drawdowns in the second and third quarters of the year.
Country |
Spain |
Assets |
€592m |
Performance) |
–6.3% (1yr) |
With sponsors and unions both represented on the board, advisers and managers who are -- besides the fund itself -- PRI signatories, and an annual ESG review and audit, GM Pensiones has robust governance and responsible investing structures. In terms of performance, its 10-year return has beaten the Spanish consumer price index by 1.6% per year, compared with its target 1.5% per year. Over the same period, GM Pensiones also boasts the third best risk/return ratio when compared with all other corporate pension funds in Spain.
Judged by
Nora Finn
Ravi Khanna
Philip Neyt
Chris Sier
Sponsored by
