Regional investments to counter the strong franc

Published on December 3, 2024 at 06:51.

5 mins. reading

When it comes to investing, is it wise to rely mainly on familiar and known stocks? In any case, this is not what financial theory says. Indeed, the figures show that historically, by relying exclusively on the internal market, we significantly increase the risks due to too strong a concentration on specific sectors and on the national currency, while also depriving ourselves of opportunities potential returns. International financial markets rarely move at the same time and in the same direction. Periods of low performance in one region or sector can thus be offset by good performance elsewhere.

However, Switzerland is once again a special case. Often, certain foreign stocks – like artificial intelligence (AI) stocks most recently – certainly show greater gains than their Swiss equivalents. But in the long term, such a development loses its impact for the investor in Swiss francs, taking into account, for example, the fact that vis-à-vis our currency, the American dollar has lost approximately half of its value against to our franc since the year 2000. Due to lower inflation at home than abroad, in particular, the latter has gradually strengthened compared to all the other investment currencies that count. Should we therefore recommend a home bias suisse?

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