ZURICH - Swissair Group pension plans are searching for three equity and two bond managers as part of a gradual move to pool the assets of the three plans that have combined assets of 9 billion Swiss francs ($5.32 billion).
The searches - for mandates of 150 million francs each - follow a decision late last year to outsource management of the bond portfolios of the three plans and the launch in January of the plans' long-awaited pooled funds, said Felix Kottmann, chief executive officer of Kottmann Advisory AG, Zurich, investment adviser to the three plans.
Plan executives are searching for managers for three actively managed U.S. equity, European equity and Japanese equity portfolios and enhanced index strategies for U.S. bonds and European bonds.
Managers already running the asset classes for the three plans will be asked to rebid. Mr. Kottmann declined to identify them.
The Swissair Group pension plans consisted at the end of 2001 of the 2.9 billion Swiss franc VEF plan for flying staff; the 5.5 billion franc APK plan for ground staff; and the 670 million franc KV plan for senior management. Each plan has a different asset allocation.
According to the website of the Swissair pension plan, the three funds posted returns of between -9% and -12% for 2001.
Officials decided to outsource the management of the bonds to get cost savings and because it would better suit the umbrella fund structure.
The equity and bond mandates will be incorporated into the new pooled fund structure, which is being administered by UBS Fund Management AG, Basel.
In January, Pensions Fund Services Ltd., the new administrator of the three plans, pooled the active Swiss equity portfolios, which continue to be managed by Dresdner Investment Management AG, Frankfurt; the passive Swiss mandate is managed by Credit Suisse Asset Management, Zurich; the passive international equity mandates are all managed by Barclays Global Investors, London; and the passive Swiss bond funds, managed by Zurcher Kantonalbank, Zurich.
Mr. Kottmann declined to give the sizes of each fund. But so far 1.3 billion Swiss francs have been transferred to the funds from the three pension plans, he said.
"The perfect solution would be to have all three funds wholly invested in the pooled funds," but this was unlikely, said Mr. Kottmann. Plan trustees will over time decide whether to invest more assets in the funds. Eventually, he said he expects 50% to 80% of each plan's assets to be invested in the pooled funds.
Changes after collapse
The three pension plans were forced to set up a new plan administrator after the Swissair group collapsed. Reto Kuhn, managing director of the VEF plan, was appointed chief executive officer of PFS. The company already has begun pitching for pension business from companies such as Gate Gourmet International AG, Glattbrug, which are to be spun out of the remains of Swissair. The firm also will be able to solicit non-Swissair related business, said Mr. Kottmann.
UBS was appointed to administer the pooled funds despite a statement by plan executives late last year that they would review their relationships with UBS AG and Credit Suisse AG in apparent retaliation after both banks delayed bridge financing to the now-bankrupt Swissair group.
"We continue to use these money managers regardless of what happened in October, when people looked at this from an extremely emotional point of view," said Mr. Kottmann.
The plans also launched a pooled fund vehicle for absolute return funds which is being administered by Unigestion, Geneva, and was funded with 200 million Francs from the three plans.