Capital investment activities
Review of the past year
2020 started out as a continuation of 2019, with markets hitting an all-time high in February. Then, spectacularly, COVID-19 got out of China and the global economy was hit by a recession that had not been seen since World War II. Markets in both Europe and the United States plunged before recovering and then fluctuating according to the health situation, lockdown periods and the outlook for vaccines. In Europe and the United States alike, major recovery packages were put in place to contain the economic impact of COVID-19. In this difficult context, Switzerland is coping less badly than other countries, since growth for 2020 as a whole should show a negative trend of -3.3%.
The management of different types of assets in 2020 allowed Groupe Mutuel Prévoyance-GMP to register a return on equity of 2.3% free of costs, while containing portfolio volatility. By way of comparison, the benchmark index was 3.2%. This underperformance is mainly due to the shorter maturity of the bond portfolio, the cost of equity protection at the end of the year and the under-exposure to direct real estate.
The arrival of several vaccines should speed up the reopening of the economy and generate a recovery of consumption. Central banks will maintain accommodative policies and States have agreed on massive support plans. However, this potential end to the crisis is confronted to an obvious fact: stock markets in 2020 increased mainly because of debt. Government deficits used to support businesses and households are substantial. Moreover, the potential decline in tax revenues could hamper the ability of governments to respond to future economic downturns. As for putting a stop to these extraordinary monetary and fiscal policies, this is not an option in the short term: real-time economy is at a standstill, small business bankruptcies are increasing and social inequalities are growing. The pandemic will leave deep scars for many years.
Sustainable and responsible investments
Groupe Mutuel Prévoyance-GMP has been taking into account for many years now the requirements of sustainable development and acts in a socially and ethically responsible manner. This is reflected in a commitment to these topics and their implementation in investment practices.
In 2020, our values and beliefs in responsible investment were set out in an ESG (Environmental, Social and Governance) Charter. Through this charter, GMP is committed to investing its clients' assets in a safe manner, with a view to achieving competitive and stable returns over the long term through a responsible investment philosophy. A transition to a low-carbon and environmentally friendly economy is supported.
The investment portfolio of the pension fund was reviewed by Conser AG in 2020 and was found to be in line with the high expectations of the ESG Charter. This goes to show that GMP’s strategy for selecting investments has long been carried out in a way that is respectful of our planet's resources, within an approach that puts human beings and business ethics first.