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The Swiss stock market is a well-known and highly respected market. It has a long history dating back to the early 1800s. Since that time numerous share indices such as the SPI Large, SPI Mid, SPI Extra, SMI or ewta the SLI Index emerged.
In today's post, you'll learn all about the Advantages and disadvantages of the 3 important Swiss equity indices: the SLI, SPI and SMI. You will receive information about their structure and weighting, about available ETFs for the respective index and you can thus make an even more informed choice. Better and more informed investment decision meet.
A Share index is a Compilation of sharesrepresenting a specific segment of the market. It offers a Snapshot of what is going on in the sector.
The primary drivers on a share index are the Prices of the shares contained therein. Furthermore, the Weighting of the individual values (shares) the price of the share index.
The Swiss equity market has three main indices. You can use it to measure the performance of the Swiss stock market. At the same time, you can see how certain sectors and industries within the Swiss stock market are performing.
The CH market is composed of three main indices: the Swiss Performance Index SPI, the Swiss Leader Index SLI and the Swiss Market Index SMI. While the SMI is probably the best known stock index, the SPI is probably the best stock index for your wealth accumulation.
Why this opinion? You'll find out in the next few lines.
The SPI (Swiss Performance Index) is a broader index, which includes almost all companies listed on the SIX Swiss Exchange and even takes their dividends into account.
He is the most Most commonly used benchmark for Swiss equities. The index is weighted according to market capitalisation.
Frequently bought ETFs for the SPI Swiss Performance Index are:
Advantages:
Since the SPI includes almost all companies listed on the SIX (approx. 200), you have the advantage of great diversification. Accordingly, an investment in the SPI Index is considered a less risky, than for the SMI, for example.
Furthermore, the index is weighted according to market capitalisation. This means that the larger companies a greater influence on the index price have. As a result, a sudden high volatility in smaller and medium-sized companies has a much smaller impact on the index price.
Disadvantages:
Weighting by market capitalisation brings not only advantages, but also a disadvantage. Since larger companies enjoy a larger share in the index, this can lead to a Market distortion lead.
Because when the share prices of these large companies (Nestlé, Roche, Novartis) fall sharply, the whole index fluctuates.
This is how the Biggest 10 companies in the index whole 70 % at SPI off.
In a nutshell: The good performance of other, smaller titles is eclipsed and there is a Cluster risk.
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The SLI (Swiss Leader Index) is a somewhat narrower index than the SPI and only includes the 30 largest Swiss shares. It shows the performance of some of the largest Swiss companies, such as Nestlé, UBS and Novartis.
The weighting of the SLI is Better diversified than that of the SPI. Unlike the SPI, the weighting of the SLI is determined by several other factors. These include price and volume as well as liquidity and market capitalisation.
Popular ETFs for the SLI Swiss Leader Index are:
Advantages:
The advantages of the SLI Swiss Leader Index lie in the fact that, with regard to the Weighting features is more diversified than the SPI. The index takes into account not only market capitalisation in its weighting, but also other factors such as price, volume and liquidity.
Disadvantages:
The disadvantage of the SLI Swiss Leader Index is that it is Not ideal coverage of all listed companies represents. The SLI only includes the 30 largest shares on the Swiss stock market, so small or medium-sized companies are not included in the index.
Thus the share index only part of the Swiss equity market and is therefore the best in terms of corporate reach. less spread than the SPI. Poorer dispersion can lead to a higher volatility lead.
The SMI (Swiss Market Index) is often also referred to as Blue Chip Index and is the most important Swiss stock market index. It consists of the 20 largest shares on the Swiss stock exchangeThese include companies such as Nestlé, Novartis, UBS, Zurich Financial Services and the Swatch Group.
Popular ETFs for the SMI Swiss Market Index are:
Advantages:
The biggest advantage of the SMI is that it is Only the largest shares from the market. In principle, this means that you are betting on established companiesThey usually have a good balance sheet, are profitable and have functioning products. So you take less of a risk betting on small, uncertain companies.
Disadvantages:
At the same time you can Relatively small diversification as a disadvantage. Since the focus is on large companies and you are thus basically betting on companies with low growth potential, the Yields correspondingly smaller.
Furthermore, the Scattering in relation to different companies and industries within the SMI not sufficiently given.
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The SPI, the SMI and the SLI are the most important Swiss stock market indices. All three offer a good overview of the development of the Swiss stock market. However, none of these indices covers all requirements in terms of sufficient diversification.
The SPI covers numerous companies off, however, its Weighting too strong focused on a few large companies. The SLI is Well diversifiedHowever, it contains only a few titles and the selection of good ETFs for the index is (still) very small. The SMI with its 20 titles offers Not a good diversification in terms of sectors and titles.
Schwiizerfranke wish: The ideal would be an ETF on a Swiss all-share index, which would all securities equally weightedregardless of size and liquidity. However, such a representation of the Swiss equity market in the form of a single low-cost ETF does not (yet) exist.
Tip: You can learn how to build up your portfolio neatly, match the ETFs ideally and find the right mix of return and risk in the FinanceTimetable Step by step.
Which Swiss index do you invest in? Feel free to share name and ISIN with other readers!
11 responses
It is important to me to build the earning power of the whole world into the portfolio. I therefore focus on indices that cover the whole world, such as FTSE All World or ACWI. Both also include the emerging markets. The US remains the locomotive of the global economy, with large weightings in many indices.
The global indices also include Swiss stocks, but only the large-cap ones such as Nestle, Roche, Novartis, UBS and Zurich play a role. I therefore include a Small Cap All World.
Investing in small and medium-sized companies can be worthwhile. They usually grow faster, but their share price performance is more volatile. A look at the SMIM shows that its performance has lagged behind the SMI over the past three years. Nevertheless, I would not want to miss small caps in my portfolio.
I follow a 1 ETF strategy (Vanguard FTSE ALL World). As I would like to reduce the currency risk somewhat, I have been looking for Swiss ETFs. However, I am not satisfied with SMI, SPI and SLI. I would most likely choose the SLI.
I think it's a real shame that there is no ETF on Swiss small caps. That would be the ideal solution for me.
In the end, I opted for the SPI Mid ETF (CH0130595124). I can live well with a TER of 0.25% and 80 mid cap companies.
I also think that MID cap companies are less exposed to currency risks because they are not yet so strongly positioned internationally and generate more of their sales in CHF.
Hello Daniel
A good alternative is Swisscanto's Index Fund: Swisscanto (CH) Index Equity Fund
Small & Mid Caps Switzerland if you want a bit of small cap Switzerland.
FA CHF ( Valor: 31562296 / 0.3 TER 180 positions)
Greetings
Thank you for the clear article.
I have no experience with ETFs so far (but with shares).
Hence two, probably somewhat naïve questions:
(1) The "TER 0.20" is the annual fees, i.e. 0.20% of the total volume?
(2) The dividends paid out by the shares included in the ETF shall not be
but are included in the price of the SPI (as you write),
i.a. do the ETFs mentioned not pay dividends?
Many thanks
Hello Ute,
these are good questions!
I hope to be able to answer them correctly as well 🙂
1) The TER (Total Expense Ratio) are annual fees and do not include all fees, e.g. transaction costs are missing from the TER. What is included: management and custodian bank fees, distribution costs, publication and audit costs, costs for other services such as auditing or legal advice.
2) A distinction must be made here between index and ETF. Many indices take dividends into account (performance index) and other indices neglect dividends (price index).
At best, however, you will find an ETF A that distributes dividends and an ETF B that reinvests them (this is called reinvestment).
I am a fan of accumulating ETFs, which are somehow in short supply with SMI, SPI and co. But I found what I was looking for and am currently invested there: UBS ETF (CH) SPI® ESG (CHF) A-acc / CH0590186661 / TER 0.15%
Now I have started another short research and came across this ETF: UBS ETF (CH) MSCI Switzerland IMI Socially Responsible (CHF) A-acc / CH0492935355 / TER 0.28% -> maximum weight of a company at 5%! That sounds like exactly what you were looking for. Also available as a distributing variant ( CH0368190739). What do you think of these ETFs?
Hello Sebi,
thank you for your research and the references incl. ISIN! 🙂
The "catch" here is the ESG inclusion. For example, CH0492935355 only lists particularly ESG-positive companies and therefore only contains around 60 stocks in total (i.e. around 150 companies are missing).
If sustainability is in the foreground, this is good. If risk diversification is in the foreground, this stands out negatively.
Nevertheless, a good hint and many thanks for the tip!
That's exactly what I've been looking for for years where not only the big 3 are so important.
In the end, it's the mix that counts. The portfolio then becomes more complex, of course, but there is currently no better alternative.
Maybe this post will help to motivate the fund providers a bit 🙂
My comment is more of a question: What are the compositions of the portfolios of the pillar 3a providers (such as frankly, finpension, ...) based exclusively on Swiss securities? Do they refer to a specific Swiss stock index or do they try to replicate something like a Swiss all-share index?
My son, who will be moving to Switzerland in the next few days, would like to invest part of his Pillar 3a in Swiss securities and is still looking for a suitable provider.
Hello Gerhard,
The providers mentioned above focus on Swiss equities, but also diversify internationally. Here you will often find a mix of SMI, SPI, MSCI World, emerging markets, bonds, real estate, commodities, etc.
Love!