The success of a pension fund depends largely on the investment strategy.
Profond pursues a long-term investment strategy
When we invest, we primarily focus on so-called real value, i.e. equities and real estate. This is because they enable us to achieve above-average returns in the long term. As a result, our insured members benefit from sustainably high performance. For a period of almost 20 years, we have invested at least 40 per cent of our assets in equities – and successfully so. We will therefore also be maintaining this strategy in the future.
Our investment strategy can be outlined as follows:
We invest (as of: 1.1.2023)
- around 50% of our assets in equities,
- around 30% in real estate,
- 10% in bonds,
- 5% in cash and cash equivalents
- and 5% in alternative investments.
Since our establishment in 1991, we have achieved an average return of 4.9% per annum and an average interest rate of 4% per annum for our insured.
What sets us apart:
We value financial stability
The security of the pension assets and the stability of the pension fund are essential to us. That is why we protect ourselves, for example by way of a broadly diversified investment portfolio.
We have a long investment horizon
Because pension fund assets are invested over a period of around 60 years (40 years of employment and around 20 years drawing a pension), short-term fluctuations in the market can be balanced out easily. They are outperformed in the long term by increases in value. For this reason, we do not let short-term movements in the market influence us.
We focus on a diversified equity portfolio
A study by Pictet shows that equities yield higher returns than bonds in the long term. We therefore place our focus on equities, not on bonds.
20% of our assets are invested in Swiss equities. Among other things, we invest in the 75 largest shares in the Swiss Performance Index (SPI), but do not give any single stock more than 3.5% weighting. The remaining roughly 30% comprises foreign shares. Globally, we hold more than 2000 different shares, forming a highly diversified equity portfolio.
We invest an above-average proportion of our assets in real estate
Real estate is not directly dependent on stock exchange fluctuations. It therefore ideally supplements our investment portfolio.
Our real estate portfolio comprises directly held residential properties in Switzerland and commercial properties in Germany. Global real estate funds additionally round off our investments.
The real estate allows us to benefit from regular income (rental income).
We face up to the changed market environment
Pension funds traditionally rely on bonds because they have secured reliable returns in the past. In the years when a low interest rate environment prevailed, bonds barely delivered any returns at all. Unfortunately, despite the fact that nominal interest rates are now rising, bonds continue to deliver negative real yields due to increased rates of inflation. That is why we at Profond have a low bond component and are supplementing our portfolio with alternative investments, such as infrastructure investments.
We are aware of our responsibility
Our goal is to secure prosperity for our insured members in the third stage of life. At the same time, we also want to take responsibility towards society and the environment. Our activities in this respect focus on areas where we can achieve an impact that is as direct and significant as possible. Investments in controversial weapons are excluded and our investments are SVVK-compliant. By converting the Equity World portfolio to a climate-friendly solution, we have reduced the carbon footprint for that portfolio by 44% in 2023. We are consistently pursuing a CO2 reduction path for real estate in order to be CO2-neutral by 2050 at the latest. In addition to exercising voting rights in our shares, we are committed to active dialogue as a member of the Responsible Shareholder Group. In doing so, we are actively contributing to ensuring that the companies in which we are invested act sustainably.
Want to know more? Read our report "Responsible Investing 2022".