EXCLUSIVE-INTERVIEW-Novartis Pension Funds to invest in metals

(Updates with quotes, details)

By Atul Prakash

LONDON, May 21 (Reuters) - Switzerland-based Novartis's (NOVN.VX) pension fund plans to invest four percent of its 14 billion Swiss francs ($11.37 billion) in precious metals, the manager of the pension fund told Reuters on Monday.

"What we want to do is to invest one percent, that is 140 million Swiss francs ($114.1 million), in gold, one percent in platinum, one percent in palladium and one percent in silver, that's more or less half a billion Swiss francs," Andre Ludin, head of portfolio management at drugmaker Novartis AG, said.

"We have decided and we will do it. We will do it very slowly because we have to be very careful for platinum and palladium," he told Reuters in a telephone interview from Switzerland.

Platinum prices surged to an all-time high of $1,395 an ounce in November on tight market conditions and talk of the launch of exchange-traded funds (ETFs) based on physical metal. Prices were quoted at $1,305/1,310 by 1421 GMT on Monday.

"It's a question of diversification because we have shares, we have bonds," he said, adding returns on bonds were low and therefore investing in metals was another way.

Ludin said the fund planned to invest in stocks of big precious metals companies and wanted to have exposure in ETFs.

It has already started investing in a gold ETF, launched by Zurich Cantonal Bank, Ludin said, but gave no further detail.

"Gold is money and what we have today is just paper money, and that's worthless," he said, adding gold was likely to rise in future as the real value of the paper money was expected to decline with increased printing of currency notes.

He said the fund preferred to have physical metals and not futures contracts.

Ludin said the precious metals had scope to rise and investment in the sector was expected to be profitable in the long run.

Platinum was an interesting metal as its demand was growing because of higher consumption in catalytic converters and new technologies such as fuel cells in vehicles.

"That's the future metal. That's why we invest there."

((Reporting by Atul Prakash, editing by Michael Roddy; Reuters Messaging: atul.prakash.reuters.com@reuters.net; +44 (0) 20 7542 7744))

($1=1.227 Swiss Franc) Keywords: MARKETS PRECIOUS/FUND

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