Swiss private pension funds hit a record high funding level of 122.7 per cent in May, since records began in 2000, according to the latest Swisscanto Pension Fund Monitor.

It follows a 1.6 per cent return for the month, driven by rising equity markets, which lifted the average year-to-date performance to 3.3 per cent.

Meanwhile, public-sector pension funds with full capitalisation reported a funding ratio of 116.5 per cent, while partially capitalised schemes reached 93.5 per cent. Both figures also represented new record highs.

Swisscanto said equities once again led the positive market environment.

Foreign equities delivered the strongest performance among the major asset classes in May, returning 5.1 per cent, while Swiss equities gained 3.3 per cent.

Commodities were the weakest-performing asset class during the month, posting a loss of 2.3 per cent.

On a year-to-date basis, foreign equities remained well ahead of other asset classes, with gains of 11.1 per cent.

Swisscanto noted that financial markets remained resilient despite ongoing disruption in the Strait of Hormuz, which has now been blocked for almost three months.

Oil prices stabilised during the month, while stronger-than-expected US inflation data prompted a temporary rise in bond yields worldwide.

At the same time, markets priced in the possibility of further interest rate increases from central banks.

Looking ahead, Swisscanto said strong corporate earnings continue to support equity markets, with semiconductor manufacturer Nvidia once again exceeding expectations.

Combined with robust economic data from the US, Swisscanto said the outlook for equities remained positive. However, it warned that its sentiment indicators suggest a “degree of euphoria”.

While the European Central Bank may raise interest rates in the near future, Swisscanto said it does not expect the US Federal Reserve to increase rates this year.

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