Swiss asset management firms have been renowned around the world for years by investors for their proven track record in global investment strategies. The majority of Swiss wealth advisors have proven time and time again that they are proficient when it comes to portfolio management and diversification on the global stage.
There are many benefits to investing in the global market, and working with a Swiss wealth management firm can set your portfolio up with the right diversification of asset classes to build a robust portfolio.
Are you worried about your dollar’s purchasing power over time? Working with a financial advisor in Switzerland can help to diversify your portfolio and maintain its strength throughout volatile markets
WHY DIVERSIFICATION IS IMPORTANT
Markets can be volatile, especially when it comes to stocks. This is why global diversification is crucial. A mistake that many investors make is focusing solely on U.S. stocks, particularly on their short-term gains. Focusing too much on a single top-performing asset class in a shorter time frame could lead to poor market timing and portfolio performance.
A diversified portfolio comprised of multi-assets from different classes may help you build a financial plan that fits your long-term goals in terms of investing and retirement. Each asset class in your portfolio has its distinctive characteristics. For example, while stocks are more volatile than bonds, they have more growth opportunities compared to bonds, which typically serve income needs better. Commodities can be potential hedges against inflation.
It’s crucial to diversify your portfolio in such a way that it stays within your risk parameters. The overall goal of portfolio diversification is to combine distinctive investments from various asset classes into a single portfolio that can help you reach some of your investment and financial goals.
THE BENEFITS OF INVESTING GLOBALLY
While they have underperformed in recent years, international stocks have performed robustly throughout history. International stocks have outperformed U.S. stocks during nearly half of all time periods over the past 50 years.
Data shows us that international stocks have outperformed 96% of the time when U.S.-based stocks have returned less than 6%, and 100% of the time when U.S.-based stocks have returned less than 4%.
Endless economic factors can influence how a region will perform, including interest rate disparities, political climates, and currency movement. Since the economic landscape is constantly changing, diversifying your investments across the globe could be a way for your portfolio to reap the benefits from whichever region is thriving at the time, while also mitigating risk.
HOW SWISS WEALTH MANAGEMENT CAN HELP
Regardless of where investors are, they will seek the best returns and security for their investments. While stocks usually offer higher returns, they come with greater risk. Bonds usually offer more security, but offer lower returns. Inflation is another variable investors must consider. Every investor hopes to find an investment that provides all three—inflation protection, security, and growth potential. The Swiss franc has proven to be a great option for investors, as it usually meets all three criteria.
Instability around the world has only made Swiss investments more popular. As the United States and European Union imposed sanctions on Russia, its investors and business have sought out safe havens that weren’t the U.S. dollar. Furthermore, both the European debt crisis from 2009-2013 and the global financial crisis of 2008 saw investors from around the globe transfer capital from U.S. currency and investments to Swiss alternatives. Time and time again during periods of economic uncertainty and market volatility, investors around the globe have consistently flocked to Swiss currency and Swiss financial services.
The robust economic system of Switzerland has a steady growth rate, as well as no or very little deficit. Switzerland’s income tends to exceed its expenses, making the country’s public finances very sound. This stabilizes the Swiss franc as well.
Switzerland also has a small debt market and does not require any foreign funds, which shields the Swiss economy and stabilizes the Swiss franc.
DURING TIMES OF GLOBAL UNCERTAINTY, INVESTORS WILL SEEK STABILITY
Investors have consistently shown that during times of uncertainty and global instability, they flock to safe havens that they believe will allow them to weather the storm until the markets are favorable again. Most often, the safe haven they may seek has historically been Swiss-based investments and currency.
Global diversification is important to mitigate the risk of volatile markets around the world. Working with a Swiss financial advisor and diversifying your portfolio with Swiss investments can be a great way to gain a hedge against inflation, diversify assets for growth, and provide stability to your portfolio. Contact the advisors at LFA to see what a Swiss-based global investment strategy can do for your portfolio.
