Pension funds experienced positive performance in November, which was largely attributed to the outcomes of the recent US presidential election.
Swiss pension funds achieved an average return of 1.46% for the month, contributing to a year-to-date return of 7.76%. The performance varied among individual funds, with yields ranging from 0.35% to 2.64%. Smaller pension funds slightly outperformed larger funds, achieving a median return of 1.56% compared to 1.38% for larger funds.
The Republican victory in the election led to a robust performance in equity markets, particularly in US equities. The bond markets also benefited from the election results, buoyed by expectations of interest rate cuts. Various asset classes performed well following the election, with global equities, foreign currency bonds, and hedge funds posting solid gains. However, real estate investments showed weaker performance, while Swiss equities recorded a negative return.
Looking ahead, UBS analysts suggest that the combination of robust economic growth and anticipated interest rate cuts could create a favorable environment for both equities and bonds, but caution investors to remain vigilant due to potential market volatility. Diversification across asset classes remains important for pension funds as they adjust their strategies to changing market dynamics. The positive returns in November may encourage funds to explore further opportunities in equities and bonds, while also considering the implications of interest rate movements and geopolitical developments.
Since 2006, Swiss pension funds have averaged an annualized return of 3.19%, highlighting their resilience and adaptability. The recent performance in November underscores the potential for recovery and growth. Diversification across asset classes remains important for pension funds as they adjust their strategies to changing market dynamics.
In conclusion, the positive performance of Swiss pension funds in November, driven by the outcomes of the US presidential election, highlights the potential for recovery and growth. With a favorable outlook for equities and bonds, pension funds may consider exploring further opportunities while remaining cautious of market volatility.