Swiss pension funds are ramping up interest in domestic private equity as they look to diversify portfolios and back local innovation.

Momentum is building, in part, thanks to Swisscanto’s latest launch: the Private Equity Switzerland Growth II L-QIF fund. The vehicle targets CHF150m (€160m) for a first close in Q3 2024. It will invest in unlisted Swiss companies across healthcare, industrials, and data services. A Swisscanto spokesperson confirmed that several pension funds have already committed.

This new fund follows Swisscanto’s fully subscribed Switzerland Growth I and World Carbon Solutions I, which closed in October 2023 with CHF130m in commitments. Swisscanto is already planning follow-up strategies, signalling growing institutional appetite for Swiss-focused unlisted equity. Learn more about fundraising efforts in Switzerland by joining the Swiss Private Equity Conference in Zurich.

Many Swiss pension funds see domestic private equity as a tool to diversify and align with their Swiss franc-denominated liabilities. Yet, hurdles remain. The lack of institutional-grade vehicles, constrained risk budgets, and added regulatory complexity all make implementation more difficult.

Still, some consultants remain optimistic. “Swiss pension funds might consider Swiss private market allocations as a ‘satellite’ exposure, particularly if their overall home bias is not excessive,” said Andreas Rothacher, senior investment consultant at Complementa.

Romano Gruber, team leader at PPCmetrics, pointed out that Swiss pension funds currently allocate around 2.5% of their assets to private equity. However, most of this allocation still targets global strategies. That said, domestic private equity offers clear advantages. These include no currency risk and access to politically stable markets.

Meanwhile, product innovation is accelerating. New initiatives such as the Deep Tech Nation Switzerland Foundation—launched by UBS and Swisscom—aim to unlock CHF50bn in venture capital. These efforts are expanding opportunities in Swiss venture and private debt markets.

As Swiss pension funds keep exploring private market options at home, private equity managers offering credible, scalable, and regulation-friendly strategies are likely to gain traction.