For several decades, institutional portfolios have been built on strategic asset allocation (SAA): a set of target weights for asset classes such as equities, bonds and real estate, each measured against its own benchmark and rebalanced periodically. The total portfolio approach (TPA) starts from a different premise. The fund is managed as a single portfolio and judged against one objective or one reference portfolio – a simple, investable mix of listed assets that expresses the level of risk the board is prepared to accept. Every investment then competes for capital on the basis of its contribution to the whole.
Charles Hyde, Head of Asset Allocation at the New Zealand Superannuation Fund, summarised the principle in a 2024 report by the CAIA Association: «each investment should earn its way into the portfolio» (Chief Investment Officer, 2024).
From asset-class quotas to one portfolio
The approach was developed by a small group of long-horizon investors. CPP Investments assesses all holdings through a factor lens – through their exposure to underlying return drivers such as economic growth, interest rates and credit spreads – so that public and private assets compete on comparable terms (CPP Investments, 2024). Australia's Future Fund operates without asset allocation targets (Chief Investment Officer, 2024), and Singapore's GIC adopted a total portfolio framework around 2021 (CAIA Association, 2024).
The largest recent adopter is the California Public Employees' Retirement System (CalPERS). Its board voted on 17 November 2025 to replace SAA with TPA from 1 July 2026 and to measure the portfolio against a single reference portfolio of 75% equities and 25% bonds (CalPERS, 2025). Adoption extends beyond the early group: in a survey by the International Centre for Pension Management (ICPM) in October 2025, about one third of 38 participating funds described their approach as TPA (Benefits and Pensions Monitor, 2026). ICPM's working-group report of July 2026 describes a spectrum of models, from fully to partially integrated, rather than a single blueprint.
The evidence and its limits
The empirical case rests mainly on peer studies. The Thinking Ahead Institute, the research body affiliated with WTW, reports that funds using TPA outperformed those using SAA by 1.8% a year over ten years in a study of 26 asset owners conducted with the Future Fund (Thinking Ahead Institute, n.d.). When announcing its decision, CalPERS cited a figure of 1.3% a year over ten years from a survey of 26 large funds (CalPERS, 2025). The funds in these samples are large, internally managed and well resourced.
Consultants differ in how they read this record. Eric Friedman of Aon supports assessing risk at the level of the whole portfolio and delegating implementation to investment teams, but observes that TPA «is not a well-defined approach» (Friedman, 2026). Aon cautions against reference portfolios that do not represent the actual allocation, against excessive flexibility and against abrupt transitions, and recommends adopting individual elements in phases.
Translating the approach into Swiss practice
Swiss pension funds enter the discussion from a position of financial strength. According to Complementa, they returned an average of 6.4% in 2025 and reached an average funding ratio of 114.5% at the end of the year (finews.ch, 2026). Equities form the largest asset class at 34.1% of portfolios, and many funds plan further investment in Swiss real estate and infrastructure (cash.ch, 2026).
The legal framework determines how far TPA can be adopted. Under the Ordinance on Occupational Retirement, Survivors' and Invalidity Pension Provision (BVV 2), the board of a pension fund is responsible for the objectives, principles, implementation and monitoring of asset management (art. 49a). Quantitative limits apply per category: 50% for equities, 30% for real estate, 15% for alternative investments and 30% for foreign currency without hedging (art. 55). A fund may exceed these limits only if it sets out conclusively in its annual report that security and risk diversification are maintained (art. 50 para. 4). In a Swiss setting, TPA therefore tends to take a hybrid form, in which the board owns a reference portfolio and a risk budget while the investment team allocates within them.
Alexandra Tischendorf of WTW argued in a podcast in January 2026 that benchmark logic loses explanatory power where portfolios contain illiquid private-market investments and pursue several objectives. She reported reservations among Swiss funds about a perceived loss of control and about measuring success without conventional indices, and expects the trend to run «clearly towards breaking down silos» (Buholzer, 2026). Philipp Weber and Laurenz Grabher of Mercer argue that investment controlling, including look-through analysis of underlying holdings, is the precondition for the approach, since a single exposure such as artificial intelligence can be spread across several asset classes (Weber & Grabher, 2026).
Infrastructure as a test case
Infrastructure illustrates both the appeal of the approach and its constraints. Since 1 October 2020, BVV 2 has treated infrastructure as a separate investment category with a limit of 10% of total assets (Tiefenthal, 2020). Under SAA, an infrastructure allocation is typically sized as a quota and measured against its own benchmark. Under TPA, the same asset is assessed by its contribution to the total portfolio: its sensitivity to inflation, interest rates and economic growth, its illiquidity, and its overlap with listed equities, private equity and credit.
That assessment requires common risk measures across public and private assets and reliable data on underlying exposures. It also requires a governance structure that allows long-dated commitments to be weighed against listed alternatives without reopening the strategic allocation for each decision.
Questions for 10 November
For Swiss trustees and chief investment officers, TPA raises a question of governance before it raises one of portfolio construction. The 09:30 session at the Swiss Institutional Symposium brings together experts from WTW and representatives of Swiss pension funds to address three questions:
- How can a board retain responsibility for the investment strategy while delegating allocation decisions within a reference portfolio and a risk budget?
- Which data, controlling and organisational capabilities does a pension fund need before the approach adds value?
- How should infrastructure be sized when it competes for capital with every other asset in the portfolio?
For Swiss pension funds, the relevant choice is therefore less between SAA and TPA than about which elements of total portfolio thinking strengthen existing governance. A reference portfolio can make the board's risk appetite explicit, look-through analysis can reveal concentrations that asset-class reporting conceals, and common risk measures can place private and listed investments on a comparable footing. Each of these elements can be introduced within the BVV 2 framework and at a pace that reflects the size, resources and risk capacity of the individual fund.
References
Buholzer, D. (2026), «Warum Schweizer Pensionskassen umdenken müssen», finews.ch, 8 January 2026 · CAIA Association (2024), Beyond comparison: Total portfolio approach and performance analysis, March 2024 · CalPERS (2025), «CalPERS Board adopts streamlined investment approach to seize market opportunities», press release, 17 November 2025 · Chief Investment Officer (2024), «Total portfolio approach: A new way to construct asset allocations», March 2024 · CPP Investments (2024), commentary on the CAIA report Innovation unleashed: The rise of total portfolio approach · Friedman, E. (2026), «The total portfolio approach is an a la carte menu», Aon, 17 June 2026 · Benefits and Pensions Monitor (2026), «ICPM tackles the ‹lack of clarity› clouding the total portfolio approach» · cash.ch (2026), «Pensionskassen setzen weiterhin auf Aktien und illiquide Anlagen», 8 September 2026 · finews.ch (2026), «Schweizer Pensionskassen erzielen 2025 starke Renditen» · Thinking Ahead Institute (n.d.), Total portfolio approach (TPA), retrieved 12 October 2026 · Tiefenthal, M. (2020), «Finanzierung von Infrastrukturanlagen in der neuen BVV 2 Anlagekategorie», PwC Switzerland, 8 September 2020 · Ordinance on Occupational Retirement, Survivors' and Invalidity Pension Provision (BVV 2) of 18 April 1984, SR 831.441.1 · Weber, P. & Grabher, L. (2026), «Investment Controlling als Grundlage für den Total Portfolio Ansatz», Schweizer Personalvorsorge (Anlagewerkstatt), April 2026. Quotations from German-language sources are the author's translations.