Hopfried Stutz: It’s better to have more francs than dollars

The MSCI World Index shows the price movements of approximately 1,600 public companies around the world. 69 percent of the named global equity funds are invested in the US, 6 percent in Japan, 4 percent in the UK. Switzerland comes to 2.8 percent. For Americans, such a high weight of their domestic market may make sense, but for us it does not. The textbook was written in the USA.

Of course, not every global equity fund invests like the MSCI World Index, with its overweight in US equities. For example, the Postfinance global equity fund invests 25% each in Switzerland, Europe, America and Asia, including developing countries. Such a spread makes more sense for the Swiss. I mention the Postfinance fund only as an example and not as a recommendation.

One reason for the excessive weight of Swiss stocks is the strong Swiss franc. I repeatedly hear from people who complain that their investment fund, which invests in the EU zone, is still at a loss. A closer look reveals that the fund’s price has risen since the purchase but is still in the red or has a lower Swiss franc value.

That’s it: currency risk. Fund units were purchased when the euro exchange rate exceeded 1.60 francs. Today the exchange rate is less than one franc.

I remember the times when we had to shell out more than 4 francs for 1 dollar in the 1970s; Today a dollar is not worth 90 centimes. In early 1999, when the single European currency was introduced, the euro was worth 1.60 francs. Today, its rate is also below 1 franc. The Swiss franc has gotten stronger and stronger throughout my life. In my opinion, there is nothing to suggest that this trend should not continue.

There is nothing wrong with also having euro or dollar securities in your portfolio for diversification reasons. Only: Too much is unhealthy, no matter how hackneyed the saying may be.