Swiss National Bank’s Twelve Percent Equity Allocation
Twelve percent of the Swiss National Bank’s (SNB) foreign reserves are allocated to global equities. Of that allocated percentage, the majority is invested directly by the Swiss central bank. Some SNB board members feel the equity allocation is too high with regards to stated diversification goals. In fact, some acknowledge that a zero to five percent allocation in equities would be sufficient enough for a central bank’s reserve diversification to reduce the risk profile. Central banks and monetary authorities are far more conservative than sovereign wealth funds when it comes to asset allocation.
The Swiss National Bank currently manages foreign currency reserves of 424.4 billion CHF.
Among Occidental monetary authorities, the SNB was seen as a forerunner when in 2004, it allowed a portion of foreign reserves to be invested in public stocks. The SNB does not buy stocks in Swiss companies. Before that change in allocation policy, the majority of SNB’s reserves were invested in fixed income instruments and gold. The SNB assesses new asset classes and other currencies in order to reduce risk concentration in developed markets.
SNB Foreign Reserve Allocation as of September 28, 2012
- Government Bonds 83%
- Other Bonds – 5%
- Equities – 12%
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