Swiss companies always make up at least 8% of the growth part of your portfolio (which can include company shares, real estate, and loans to companies).
How does Selma determine the share going into Swiss companies?
Normally, Selma weights the different investments in the growth part of your portfolio by the sizes of the markets they represent. Investments in Swiss company shares are an exception. The Swiss stock market makes up only around 1-2% of global stock markets, but Selma assigns at least 8% of the growth part of each portfolio to Swiss company shares. In finance speak, this is called "home bias".
Does it make sense to have a "home bias"?
In the case of Swiss company shares, there are two potential advantages:
They are traded in Swiss francs
Since the Swiss company shares are traded in Swiss francs, you are not exposed to any currency swings. The Swiss franc is usually considered a "safe haven" currency, so it becomes stronger when global markets are shaken. Hence, having more company shares in Swiss companies can stabilise your portfolio when global markets go through difficult times.They have a more "defensive" character
The major stock indexes of the world differ in their mix of companies. The Swiss market tends to have more companies that pay regular dividends, because their businesses are less sensitive to changes in the economy. In finance parlance, this is called "defensive", and it can help shield your portfolio in times of financial market stress.
These two advantages should make your portfolio a little bit more stable, and thus help you to stay invested for the long term. Because " time in the market beats timing the market ! " 💪
Can I increase the share invested into Swiss companies?
If you have a very high risk willingness and risk ability, and if the Selma algorithm excludes loans and real estate from the recommended investment mix for you, then the share of Swiss companies may be a bit over 10%. However, the algorithm will avoid putting an even larger weight on Swiss companies. Otherwise, you would start to lose the benefits of spreading your investments globally, and that would give you a worse risk-return outlook over the longer term.