Switzerland’s Largest Pension Fund Trims Equities for Real Estate

Publica has cut some stocks to de-risk, and will also sell some of its bonds as part of a new strategy.

Publica, Switzerland’s largest pension fund, trimmed some of the equity from its investment portfolio and levered up on real estate in July as it continues to de-risk.

The $39.9 billion public sector pension plan cut 2% of its equities in July, reducing its stock portion to 27% from 29%, according to IPE.com. It then added that amount  to its international real estate section, which has now gone to 6% of fund assets from 4%.

Local non-government bonds were also reduced by 2%. That allocation now comprises 8% of the portfolio. Publica said it will put the bond profits in private real estate financing and emerging market debt. The fund also plans to sell non-local public corporate bonds. The money will be invested in private company and infrastructure debt, which will make up 7% of the portfolio over the next three years, when it completes the implementation of a new strategy.

The real estate shift follows a trend in Swiss pension funds, according to Credit Suisse’s Q2 2018 Pensionkassen Index results. Exposure has increased by 44 basis points, and the average Swiss pension plan currently allocates 22.84% to the asset class.

Plans in the Swiss index gained 0.15% from their real estate investments in the second quarter.

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