Sustainable retirement provision in turbulent times

A market regime not seen for a long time

Since the beginning of the year, a different wind has suddenly been blowing against investors. Geopolitical tensions and rising global interest rates weighed on both equity and bond markets. And hardly any other asset class was able to escape the negative trend. This development is likely to cause some pension savers to worry - a minus in the performance statement has become too unusual. The fact that most investors have a sufficiently long investment horizon to be able to cope with major price setbacks is often overlooked. When one's own retirement capital melts away, the first doubts about the investment decisions made quickly arise.

Sleep more soundly with a risk-optimized pension solution

The last few months have been much easier to cope with for all those who have thought about their investment risks in advance - i.e. are aware of possible fluctuations in value - and have positioned themselves accordingly, e.g. with OLZ's risk-optimized pension funds. Both our Smart Invest 65 ESG (65% equity allocation) and our Equity World Optimized ESG (100% global equities) were able to weather the turbulence in the financial markets relatively well in 2022.

The mixed fund with 65% equity exposure benefited from the OLZ minimum risk approach in both the equity and bond components and was thus able to clearly outperform its benchmark (Pictet BVG-40 Index), which has only 40% equities.

The reduction of the investment risk is even more evident in our equity world strategy. While the capital-weighted benchmark, which often serves as the basis for passive (index-based) pension products, lost around 23% in the first nine months of the year, OLZ's solution lost much less, with a drop of 13%. The drawdown was thus clearly reduced with the risk-optimized implementation.

However, the advantage of the OLZ minimum risk strategy lies not only in lower losses in major market slumps, but also in consistently lower investment risks (volatility) and an associated higher risk-adjusted return compared to indexed products.

Expansion of OLZ's sustainability policy

OLZ's product range also offers advantages beyond the classic risk/return dimension. For example, we revised and expanded the sustainability standards of our funds a year ago. For example, the CO₂ emissions of individual companies are now integrated into the optimization process, and the footprint of the overall portfolio is reduced in an index comparison. Additional points have also been added to the exclusion criteria. Thus, companies are excluded from the investment universe that, for example, produce controversial or nuclear weapons, generate significant sales with oil sands or thermal coal, or violate fundamental human and labor rights principles. If you would like to take a closer look at OLZ's approach to sustainability, you can find more detailed information here.