(IPE) PKBS, the CHF15bn (€16bn) Pensionskasse of the city of Basel, has switched to Pictet Asset Management and Legal & General Investment Management (LGIM) to manage assets worth over CHF4.5bn to steer clear of concentration risks that surfaced following the emergency takeover of Credit Suisse by UBS.
“A tender [of asset management mandates] can have various reasons, such as inadequate performance, cost reduction or risk management. In this case we wanted to diversify risks,” said chief investment officer Max-Eric Laubscher in an interview with the scheme’s in-house publication Aspekte.
Laubscher explained that the emergency takeover of Credit Suisse by UBS in March 2023 triggered the decision of the pension fund to look for new asset managers.
The takeover meant that the asset management mandates already handed out by the scheme to Credit Suisse ended up with UBS, which already acts as fund manager and custodian bank for PKBS, the CIO added in the interview.
“That would have led to a concentration with just one provider, which is what we wanted to avoid. [Asset manager] diversification is a central element of our risk management at all levels,” Laubscher said.
The new asset managers picked by PKBS are now responsible for the investment of CHF4.5bn worth of assets in domestic equities, developed countries and emerging markets equities, the CIO added.
“The mandate remains the same: the investments with 1,500 titles are indexed and implemented as cost-efficiently as possible, because with large amounts of investments even small changes make significant differences in terms of costs,” Laubscher said.
PKBS has also changed its investment strategy for 2025, increasing allocations to foreign equities and bonds by 0.5% each, while cutting exposure to foreign real estate investments by 1% as interest rates increased, it said.
This year the scheme will target 13% of total assets allocated to bonds, 5.5% in loans, 4% in convertible bonds, 13.5% in domestic equities, 20% in foreign equities, 24% in domestic real estate, 4% in real estate abroad, 3% in gold, 4% in private equity and infrastructure, 4% in cash, while continuing to avoid investing capital in insurance-linked securities, it said.
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