Swiss Government Pension Fund Allocating 2% Of Pension Fund To Gold Bars

via IPE Quest

The Swiss government pension fund, Switzerland’s AHV/AVS fund, has decided to diversify into physical gold bars in their substantial CHF35.2bn (€30.5bn) pension portfolio.

At the end of last week the first pillar buffer fund tendered a custodianship and storage for CHF 700m (EUR 600m / USD 700m / GBP 525m) in gold bars via IPE Quest.

The bars are to be stored in Switzerland either collectively or individually, the tender (QN-2447) states.

The tender marks a shift in the investment strategy for AHV/AVS, as it previously only invested in gold and silver via swaps.

“The supervisory board has decided we are to invest in physical gold bars from now on,” the fund told IPE in a statement.

In 2016 the supervisory board of the buffer fund decided to raise its the commodities exposure from 1% to 2% while divesting from energy-related commodity exposure.

The fund explained last year that gold was better suited to add “diversification and hedging in certain situations (inflation or recession)” than the previously preferred energy commodities.

In March the investment committee confirmed the decision to change the precious metal mandate from swaps to physical gold.

The fund told IPE: “The mandate has not been changed yet. The investment committee asked for the change to be implemented by year-end 2018.”

No further details were given on the mandate or the shift in strategy.

As per March 2018, the fund held CHF682m in gold and a minor investment in silver, with a target allocation to precious metals of 2%.

This means by year-end the swaps exposure to silver would have to be phased out and the precious metal portfolio would consist of physical gold only.

Switzerland remains one of the safest jurisdictions in which to own gold. Find out why in our Essential Guide to Gold in Switzerland here

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