The recent and unprecedented market events in the first quarter of 2020 have put an end to a decade of broadly positive returns on both equities and fixed income. Swiss pension funds have generally benefited from these combined bull markets, as much as they also benefited from strong performances on their Swiss real estate allocations. These three main asset categories constitute the base allocation for most Swiss pension funds.
The average allocation to alternatives, on the other hand, has stood below 10% over the past ten years. Most strikingly, when looking in more detail, one can notice that average allocations to private equity or infrastructure have stood below 1% respectively. We believe it is now time for Swiss pension funds to more broadly consider alternative assets and especially private markets to benefit from a better diversification and higher expected returns.
In our short paper “The Case for Private Markets”, we summarize how private markets can add value for Swiss pension funds and where we see the biggest potential.