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Swiss financial institutions are boosting their funds for investments in pillar 3a. Also with the issue of sustainability. A closer look is highly recommended.
UBS announced Tuesday that it would only offer sustainable funds to invest in retirement assets in the second and third pillars in the future. “Like the first Swiss bank”, as was superlatively emphasized on the Paradeplatz in Zurich. “Sustainable” sells well and always better: the climate youth sends their regards.
ESG is the abbreviation that UBS also uses. It means Environment, Social, Governance – or in English Environment, Social and Corporate Management. Meanwhile, the established standard, which is supposed to make sustainable asset classes easier to compare and also includes factors other than purely financial ones.
Important to Investors: These sustainable funds often pursue a “best-in-class” approach. In other words: fund managers not only select stocks of companies active in particularly green branches of the economy, but also those that perform better in their branch in terms of sustainability. At the same time, this does not mean that companies are out of the question when it comes to sustainability.
Investment sustainability is not an ecological whim
Even companies whose shares are represented in a fund that includes ESG can do much more to reduce their ecological footprint, offer more progressive working conditions, and improve the transparency and integrity of their business processes.
So the question arises whether this really promotes sustainability. In addition, it can be said that sustainability in investment is not a whim of green benefactors, but a relevant factor in the investment process, with the potential to reduce risks. Wealth invested in sustainable investment vehicles has been growing at an above-average rate for years, increasing pressure on companies to follow this path.
Green is not free either
Using the example of sustainable funds announced by UBS for Pillar 3a clients, it is noted that all of these offers are funds of funds. In other words, the fund manager bundles several other funds into a new investment vehicle. The advantage: broader diversification and therefore better risk distribution. The downside: such constructions have comparatively high fees. Because even with the funds that are included in the fund of funds, the fees are lowered.
In fact, the fees for UBS 3a funds are relatively high. When asked by SRF, the online comparison service Moneyland.ch verified the total costs of UBS funds. With an investment amount of 100,000 with an investment horizon of 10 years, they add up to an average of 1.46 percent per year. In contrast, the average value of all pension funds is 1.21 percent.
And it is the commissions that the investor must watch, because they reduce their effective return. Although they represent good business for the bank. Totally regardless of how sustainable the money is invested.
Matthias pfander
Reporter business editor
