RI profile: How one of Switzerland’s largest pension schemes invested CHF130m into microfinance

When the CHF13.6bn (€11.2bn) Swiss Post Pension Fund (PK Post) awarded a CHF130m microfinance mandate to Zurich-based specialist, responsAbility last year, it was the fund’s first foray into the asset class. Rolf Maurer, Investment Manager at the fund, told Responsible-investor.com that the mandate had been awarded as a long-term investment, but with no explicit timeline. He says microfinance had been on PK Post’s radar screen for some time: “We began taking a closer look after our investment committee directed us to do so in 2010,” he added. The fund carried out the initial research on the asset class via its own internal investment team. Maurer said: “From the beginning it was clear to us that the investment had to be worth it from a social and financial standpoint. The internal study revealed that this was the case, both in terms of risk/return and especially diversification. This is why we went ahead. The fund subsequently hired an independent external advisor, Zurich-based onValues, working in cooperation with Ecofin, the Zurich-based investment consultant, to carry out the manager search. Zurich-based responsAbility, which was finally hired for the brief, is a $1bn investor in social investment companies in developing countries. Its areas of focus include microfinance, SME financing, fair trade, and independent media. The performance goal for the mandate was set 80% USD-Libor +1.5% / 20% EUR-Libor +1.5%. In an article on responsAbility’s website, Maurer said a key precondition for sustainableinvestments at the fund was their competitiveness. He said: “In other words: sustainable investments must not lead to lower returns or higher risks. Our analysis of microfinance assets has shown that this asset class fulfills our set selection criteria: it offers an attractive risk/return ratio and can be expected to enhance our portfolio diversification.” Maurer said it was premature to speak of a trend, but said he had noticed that impact investment had risen on the agenda of larger pension funds over the past few years: “No doubt, the increasing awareness of the public in general, and beneficiaries in particular, has contributed to the fact that pension funds can no longer ignore this issue. In addition, these investments have been shown to at least match or even top the returns of conventional investments.”
Maurer told Responsible-investor.com that SRI was not a separate asset class for PK Post but that the fund has awarded global equity mandates which meet sustainable criteria. PK Post is also a member of the Engagement Pool run by Geneva-based SRI foundation, Ethos, which promotes sustainable management within investee companies. He said there are no plans to extend the microfinance commitment at present. PK Post was founded in 2001 and is a defined contribution DC scheme. It insures employees of the Swiss postal service and its subsidiaries. As of 31 December 2011, it had 74,700 members, 46,200 contributors and 28,500 pensioners.