Swiss equities – a good option in turbulent times?

The US government’s punitive tariffs are putting tremendous strain on world trade and global stock markets. It is unclear how the tariff policy will develop – not least in light of retaliatory measures. A major strength of the Swiss equity market becomes apparent in times like these: it has proven relatively stable, even during highly volatile market phases. Over the past 50 years, Swiss equities have achieved an average annual return of 9.4% – almost the same as their US counterparts (9.6%).

The following benefits are good reasons for investing in the Swiss equity market:

Stable conditions

Switzerland is renowned for its political stability, low level of national debt and robust, well-diversified economy. This creates a reliable investment environment.

Strong companies with a global presence

Many Swiss companies, such as Nestlé, Novartis and Zurich Insurance, are global leaders in their respective sectors. They generate a large share of their revenues abroad, ensuring international diversification. To reduce the impact of US tariffs, caution should be exercised over companies that mainly serve the US market – unless they have their own production sites there.

Defensive nature

The Swiss equity market is considered defensive because many companies operate in crisis-resistant sectors (healthcare, food and insurance). This means Swiss equities often undergo less severe fluctuations, especially during turbulent market phases.

Strong currency

The Swiss franc is one of the world’s most stable currencies and is frequently used to hedge against currency fluctuations. A strong Swiss franc also increases the purchasing power of Swiss companies abroad, enabling them to buy raw materials and services at more favourable prices and giving them a competitive edge.

High dividends

Many companies on the Swiss stock market, particularly the Swiss Market Index (SMI), pay out high dividends to investors every year. That’s only possible thanks to solid balance sheets, promising business models and high levels of profitability. Dividends are very advantageous during volatile periods: they provide regular income and minimise losses in the event of price slumps.

If you’re looking to shore up your portfolio, Swiss equities provide a good counterweight to the more growth-orientated US market.

Barbara Russo is a customer advisor at Migros Bank and an investment expert.