Today I came across the graph below (arrows and highlighting added by me) on the website of the Swiss Old Age and Survivors Insurance (OASI/DI – AHV/IV – AVS/AI). It shows the equity portion of the holdings and how they switched from close to 30% Emerging Markets in December 2012 to 15% by September 2013. And at the same time increased holdings in European Large Caps by close to 10%. What I hadn’t been able to deduce rightaway, whether they sold out after underperforming by 15% and were maybe chasing outperforming indices on a quarterly basis, or if they changed their strategy ahead of time, i.e. in an adaptive fashion. Two possible conclusions: acting pro-cyclically or using market timing, i.e. active management – or more specfically enhanced indexing (the latter as it turns out). The former would be tough, the latter maybe less so.
The graph below shows that a very large portion of the over CHF 30bn in the Siwss Old Age and Survisors Insurance fund is invested using enhanced indexing. Enhanced indexing is a hybrid between active and passive management and describes strategies used in conjunction with index funds for the purpose of outperforming a specific benchmark.