Opinions on the stock market: Swiss equities
Article written on 6 September 2023
Conventional wisdom has it that those who rely on yields and wish to sleep soundly buy bonds. This is only partially true, as was demonstrated clearly last year.
After losing 12% in 2022, the Swiss Bond Index (AAA-BBB) has firmed again by around 4% since the beginning of the year. If the recovery were to continue at this pace, it would take another two years or so to compensate for the losses.
Although interest rates rose sharply in Switzerland too, the bond market is only returning 1.6%. In contrast, the dividend yield for the Swiss equity market measured against the Swiss Performance Index is 3%.
While it is the case that the dividend yield is unstable and fluctuates in tandem with share prices, the dividend is paid in Swiss francs and is rising more or less constantly. As real assets, Swiss equities offer protection against inflation and an above-average income by way of dividend payments. In this context, we like ABB, Holcim and Zurich Insurance.
