moneyland.ch studied the performance of 86 Swiss retirement funds in 2023. The study reveals that all 86 retirement funds delivered positive performance in the past year. The performance ranged between 2.4 percent and 13.7 percent, depending on the fund.
2023 performance compared to the stock and bond markets
On average, the retirement funds included in the study had a stock component of 48 percent and a bond component of 39 percent. Swiss securities are heavily weighted in the investment portfolios of Swiss retirement funds. But many funds also invest in international securities, and particularly US titles.
With an average performance of 6.3 percent (unweighted average) in 2023, Swiss retirement funds performed slightly better than the Swiss Performance Index (6.1 percent), but fell behind the Swiss Bond Index (7.4 percent) and the US stock market index S&P 500 (15.0 percent when converted into Swiss francs).
The best-performing retirement funds in 2023
The LUKB Expert-Vorsorge 75 E from the Luzerner Kantonalbank had the best performance (13.7 percent), followed by the BLKB iQ Fund - Responsible Equity World ex Switzerland B USD from the Basellandschaftlichen Kantonalbank (12.9 percent), and the frankly Extreme 95 Responsible from the Zürcher Kantonalbank’s Frankly platform (11.2 percent).
Other retirement funds with two-digit performance figures include the UBS Vitainvest - Passive 100 Sustainable Q (11.0 percent), the frankly Extreme 95 Index (10.9 percent), the ZKB Swisscanto IPF III Vorsorge Fonds 95 Passiv VT (10.5 percent), and the LUKB Expert-Vorsorge 45 E (10.1 percent).
Retirement funds lag behind over longer terms
In spite of their good performance in 2023, a look at performance over longer terms show that Swiss retirement funds lag behind the stock market. Retirement funds that invest exclusively in stocks delivered a performance of 7.3 percent over the past three years. During the same period, the Swiss Performance Index (SPI) gained 9.3 percent, and the S&P 500 gained 26.5 percent (converted into Swiss francs).
Retirement funds lag even further behind when you look at performance figures for the past five years. While retirement funds that invest only in stocks returned 41 percent, on average, the Swiss Performance Index gained 48 percent, and the S&P 500 gained 78 percent (converted into Swiss francs).
The high costs of these funds – their total expense ratios or TERs – play an important role in their relatively weak performance. “Using conventional retirement funds often costs much more than using ETFs or index funds,” observes moneyland.ch analyst Felix Oeschger.
Historical performance should not be overrated
“When choosing a retirement fund, historical performance should not be the primary consideration. It is much more important to look at the total costs, as over the years, these costs subtract a substantial portion of your returns,” stresses moneyland.ch analyst Felix Oeschger. The vast majority of the 86 funds included in the moneyland.ch study are conventional funds with their own ISINs. Online retirement asset management services are often notably cheaper.
The bigger the stock component, the higher the performance
In recent years, the number of retirement funds that invest exclusively in stocks has grown remarkably. That is a welcome change because from a historical perspective, stocks have performed better than other asset classes. Although stock investments are exposed to substantial fluctuations over the short term, most people saving for retirement have a far investment horizon. “For investors who can cope with fluctuations and are saving over long terms, using stock funds is a good financial move,” says Felix Oeschger.
Methodology
moneyland.ch studied 86 Swiss retirement funds. Unlike many online retirement asset management services, these are individual funds with their own ISINs.
Performance figures account for the deduction of fund TERs. In the case of funds that distribute dividends, performance is calculated based on the returns that would be achieved if dividends were reinvested into the same fund (total return). The shares of the BLKB iQ Fund - Responsible Equity World ex Switzerland B USD retirement fund are traded in US dollars, but performance figures are converted into Swiss francs.
The study uses the TERs published by fund managers. TER figures show the ongoing costs of using a fund to invest. Costs that are not accounted for in the TER, but are accounted for in the total costs, include sales charges, custody fees for the safekeeping of fund shares, flat fees, and deferred sales charges. If a TER KGAST or a synthetic TER is available, this figure is used in the study. Standard TERs are calculated in arrears.
The total return performance versions are used for both fund performance and stock index performance figures.
More on this topic:
Tips for choosing a pillar 3a retirement fund
Compare pillar 3a retirement funds now
Pillar 3a contribution limits
Download the detailed study as a PDF
