All asset classes apart from foreign real estate and private infrastructure investments showed an increase in 2023, allowing PUBLICA to post a positive return for the fiscal year as a whole. The closed pension plans gained 4.7%, the open pension plans 3.8%. The consolidated net investment return was 3.85% on a currency-hedged basis after all costs and taxes. Asset management expens-es amounted to 0.3 of a percentage point.
The closed plans contain only pension recipients, whereas the open plans contain both pension recipients and active members who are still working. This is why PUBLICA maintains a higher-risk as-set allocation for the open plans compared with the closed plans. The strategic asset allocation for the closed plans achieved a higher performance in 2023. This was mainly due to its greater proportion of Swiss investments (60%). PUBLICA merged its seven closed plans into a single plan with effect from 1 January 2024.
The consolidated funded ratio across all plans at the end of 2023 was 98,3%, which is slightly higher than the previous year’s figure as expected. The consolidated funded ratio of the open plans was 98,1%, with three of them still underfunded (compared with nine at the end of 2022). The consolidated funded ratio of the closed plans was 100,6%.
Equities and bonds contributing most to results
Equities had the biggest positive impact on PUBLICA’s consolidated assets in 2023. With a net return of 8.5% for the year, they made a positive contribution of 2.7 percentage points to the overall return of 3.85%. However, there were wide variations across regions and sectors. The best performing equity region was North America with 15%, followed by the Pacific and Europe ex Switzerland regions, which each gained almost 9%. Swiss equities returned 7%, emerging market equities 2%.
Bonds had the second-biggest impact on PUBLICA's consolidated assets. With a return of 4.1% for the year, they made a positive contribution of 2.1 percentage points to the overall return. Swiss bonds fared best with a gain of almost 7%, followed by private infrastructure bonds with just under 6% and corporate bonds from industrialised nations with just over 4%. The lowest returns within the bond portfolio came from inflation-linked government bonds (0.3%) and government bonds from industrialised nations (2%).
Real estate once again generated a positive performance in 2023, with directly held Swiss real estate returning just under 2% for the year as a whole following a slight fall in value. Foreign real estate funds suffered significant losses due to higher interest rates in many industrialised nations. For diversification reasons, PUBLICA invests a portion of its assets in precious metals such as gold and silver. Precious metals made a positive contribution to PUBLICA’s portfolio in 2023, returning almost 5%..
Strategic asset allocation implemented on schedule
PUBLICA adjusted its strategic asset allocation in the middle of 2022 and worked out a four-year plan for implementing the new allocation. Changes made under this plan in 2023 included increasing the allocation to equities from 28% to almost 32%, successively reducing investments in emerging market government bonds, and making initial investments in the new asset class of private infrastructure. The allocation to precious metals was also increased from 2% to 3%.
Increased transparency concerning responsible investment
PUBLICA increased transparency in 2023 by publishing its first comprehensive responsible investment report. It has prioritised four of the 17 UN Sustainable Development Goals and has already begun the learning phase and impact measurement for these. Entering into dialogue and exercising voting rights are two key approaches to responsible investment. PUBLICA aims to make greater use of these going forward and has therefore added an escalation mechanism to the process it employs to exercise voting rights. This mechanism comes into play when dialogue with a company reaches an impasse.
Further details on the 2023 results and on sustainable investment will be contained in PUBLICA’s Annual Report, which will be published in mid-April.