swissaustrian
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I met an old co-student from university times today for lunch, he is part of the management team of a major private pension trust for one of the biggest companies in Switzerland. His trust manages more than $3 billion.
We were talking about what they are doing with their money. They hold a whopping 56% of their assets in Swiss, German and US government bonds as well as money market instruments, meaning they make basicly ZERO returns on half of their portfolio. And it gets better: They have seriously considered to accquire a banking license for their trust, so they wouldn't have to park their liquidity at banks and money markets funds, i.e. face counterparty risks. Instead, they wanted to park their money directly at the SNB through their own bank. Their legal team figured out that this is prohibited by law, however: Pension trusts may not accquire banking licenses in Switzerland.
Then we went on to talk about gold as an alternative currency and he told me that his investment advisory board has declined to allow the trust to hold a maximum (!) 0.5% of it's assets in gold. They say it's "too risky". In order to understand that, you have to know that these advisory boards usually are made up of politicians, employee representatives (mostly unionized) and some senior bankers.
To make a long story short: Institutional investors are still mostly apathetic towards gold. They're going to face serious losses on their fixed income portfolios once interest rates rise.
We were talking about what they are doing with their money. They hold a whopping 56% of their assets in Swiss, German and US government bonds as well as money market instruments, meaning they make basicly ZERO returns on half of their portfolio. And it gets better: They have seriously considered to accquire a banking license for their trust, so they wouldn't have to park their liquidity at banks and money markets funds, i.e. face counterparty risks. Instead, they wanted to park their money directly at the SNB through their own bank. Their legal team figured out that this is prohibited by law, however: Pension trusts may not accquire banking licenses in Switzerland.
Then we went on to talk about gold as an alternative currency and he told me that his investment advisory board has declined to allow the trust to hold a maximum (!) 0.5% of it's assets in gold. They say it's "too risky". In order to understand that, you have to know that these advisory boards usually are made up of politicians, employee representatives (mostly unionized) and some senior bankers.
To make a long story short: Institutional investors are still mostly apathetic towards gold. They're going to face serious losses on their fixed income portfolios once interest rates rise.