Switzerland’s Nest scheme considers SRI private equity and hedge funds

The SFr650m (€390m) Zurich-based Nest pension scheme is mulling allocations to responsible private equity and hedge fund strategies as part of a risk review of the fund’s 100% SRI investments. Nest, an umbrella defined contribution (DC) fund, which runs assets for about 1600 small and medium-sized Swiss companies, has invested wholly in SRI since it started in 1983. Its investment portfolios follow an in-house RI ratings standard, the INrate system, which it developed with Swiss SRI research group Infras.
Felix Pfeifer, chief executive officer at Nest, told Responsible Investor: “We are quite risk averse and have 57% of assets in fixed interest, both credits and government bonds, 23% in equities and 20% in real estate. Our question is how we can take a bit more risk. We are interested in private equity and have a small allocation with Partners Group in Switzerland, which does have elements of Cleantech investment. Pfeifer says Nest is following closely the debate on cleantech and renewable funds, particularly based around the water conservation theme, and that they have looked at some interesting hedge funds operating in the SRI arena: “We think we will end up hiring other managers in 2008. Wehave seen studies that say that performance is not worse from SRI, but we have had good performance!”
In 2003, the fund’s aggregate returns were 10.7%, dipping slightly to 5% in 2004. By 2005 it was back up to 9.9% before dipping slightly to 6.9% in 2006. Pfeifer said the number of members of the Nest scheme had risen by 10% to approximately 8000 in the first half of 2007 alone.
Switzerland is one of Europe’s most active markets for responsible investment, both in terms of investors and fund managers. A similar fund to Nest, the Abendrot Foundation, runs SFr500m on an SRI basis for companies around the city of Basel. The best known is Ethos, the Geneva-based foundation which looks after CHF2.3bn (€1.4bn) in RI assets, mostly on behalf of Swiss pension funds. Research issued in August by Zürich-based research company onValues said both Swiss institutional and retail investors were showing more interest in themed SRI funds than ever before.
It said investment in sustainability-oriented mutual funds, segregated accounts and structured products doubled in a year to reach CHF25bn (€15.3bn) at the end of June 2007.
Click here to read the full Nest interview