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| Type | Master's Thesis |
| Scope | Discipline-based scholarship |
| Title | The Negative Interest Rates Environment: What Impact on the Asset Allocation to Real Estate by the Swiss Pension Funds? |
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| Institution | University of Zurich |
| Faculty | Faculty of Business, Economics and Informatics |
| Number of Pages | 70 |
| Date | 2017 |
| Abstract Text | In the aftermath of the financial crisis, many financial institutions were forced to rethink the asset allocation of their investment portfolios, the interest rate paid on cash and similar investments approaching the zero bound and sometimes even below zero for some currencies like the Swiss franc or the Japanese yen. Pension funds accounting for a large part of the assets held in the financial system, were also forced to follow this trend in order to preserve their returns on investment without engaging in reckless risk taking. However, as per the traditional theory of finance, more return also implies more risk. The Swiss franc having reached negative territories since 2015, the Swiss Occupational Pension Funds also needed to shift their asset allocation form cash and similar to riskier and potentially more illiquid assets. Real Estate being one of the main asset class composing the asset allocation of pension funds, it was potentially a designated candidate for an allocation increase, shifting asset away from cash and similar investments into RE. However, other asset classes were also considered by pension funds’ asset managers, such as Foreign Equities and Alternative Investments. The aim of this thesis is to analyze the potential effects of the negative interest rates policies on the allocation to Real Estate (and possibly other illiquid asset classes) by global pension funds and more specifically the Swiss Occupational Pension Funds. |
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