The performance of Swiss pension funds was positive again in October. The average return after fees was 1.16 percent, up from 0.77 percent in September, according to UBS’s monthly pension fund study. The range of returns among the individual funds in the sample extended from 0.13 percent to 2.81 percent.

Since the beginning of the year, total returns stand at 4.81 percent, while the annualized return since the launch of the UBS Pension Fund Performance Index in 2006 is 3.29 percent.

Among smaller pension funds (with less than 300 million Swiss francs in assets under management), the median performance of 1.17 percent in October was slightly higher than that of larger funds (with more than 1 billion francs in assets), which achieved 1.1 percent.

(Graphic: UBS)

Global equities were the strongest performance drivers in October, gaining 2.93 percent as an asset class. They were followed—at a clear distance—by Swiss equities (1.45 percent), hedge funds (1.21 percent), foreign currency bonds (0.86 percent), private equity (0.52 percent), Swiss franc bonds (0.51 percent), indirect real estate (0.51 percent), direct real estate (0.43 percent), and infrastructure investments (0.02 percent).

Resilient Markets

Global markets proved resilient in October, experiencing intermittent phases of increased volatility. Despite the first U.S. government shutdown since 2018, the S&P 500 rose by 2.3 percent, reaching another record high. Solid U.S. consumer spending, the Federal Reserve’s second 25-basis-point rate cut, strong third-quarter earnings, and continued AI-related investments supported market sentiment.

The UBS CIO remains optimistic about global market prospects despite ongoing challenges. It does not expect an escalation in U.S.-China tensions, noting that U.S. government shutdowns generally have limited economic impact. Easing inflation and weaker labor market data could prompt further rate cuts by the Fed.

Regarding concerns over a tech bubble, UBS experts are not alarmed. While valuations in the tech sector are elevated, the CIO points to strong AI investment and the transformative potential of innovation. Current valuations are not overheated, with today’s tech giants trading at much lower price-to-earnings ratios (around 30x) compared to the dot-com peak (>70x).