Switzerland has long been renowned as a powerful honeypot for foreign investment, a booming finance hub surrounded by European trade giants. With a prized service sector revolving around a world-class banking industry, Switzerland often finds itself a prime target for sustainable, low-risk investment. Based on GDP per capita, Switzerland sits at number 6 globally, comfortably in front of economic powerhouses such as the US, Hong Kong, Germany and the UK. 74% of Switzerland’s GDP is powered by the services industry - predominantly its famed banking infrastructure.
The Swiss Franc is favoured as one of the world’s most stable currencies, knocking heads with the US dollar as a popular long-term choice for investor portfolios. The nation’s long-standing political and financial equilibrium, financial transparency and low-interest rates are attractive factors for the Swiss Franc.
Feeling the pull of the Swiss infrastructure? Learn about the popular investing methods in Switzerland, from ETFs to alternative angles such as real estate crowdfunding and Peer-to-Peer lending.
Investment Culture In Switzerland
From individual company shares and index-trading ETFs to a thriving pool of alternative investment platforms, the investment culture in Switzerland is ripe with opportunity. Along with the country’s political and economic stability, the country has earned itself a reputation as one of the world’s largest tax havens, putting many of its investment choices one step ahead of its international competitors.
The main stock market in Switzerland is the SIX Swiss Exchange, operating out of Zurich. The exchange is Europe’s 3rd biggest, a popular choice for Swiss securities, bonds and ETFs. Leading the charge is the Swiss Market Index (SMI) - an index similar to that of the FTSE 100 or DAX 40 which lists the country’s most valued blue-chip companies. Other Index listings include the SMIM and the SPI.
A large slice of the Swiss investment landscape is internationally bred. Recent data shows that banks in Switzerland hold over $6.5T in managed assets, and a massive 48% of these investments were made from abroad. Switzerland is the cross-border asset king, and investors are still flocking to the favourable system. Investing in Swiss property as a foreigner is a little more difficult, but a little later we will touch on how it becomes possible through real estate crowdfunding.
Investing In Switzerland Via ETFs
A reliable way to latch straight onto the bastion of financial growth is through ETFs that track certain Swiss stocks. By tracking overall growth or depreciation, they provide anyone with little capital collective exposure to powerful companies registered in Switzerland. It’s easy to find Swiss index ETFs via the stockbroker of your choice. Investors might want to compare various index’s across countries. For example, due to the resilient strength of the Swiss Franc (CHF), long-term growth in the SMI appears higher than that of the FTSE 100 due to the comparative weakness of the GBP, which may be something worth bearing in mind.
- Invesco CurrencyShares Swiss Franc Trust (FXF)
- iShares SMI ETF (CSSMI)
- iShares SMIM ETF (CSSMIM)
- Xtrackers SLI UCITS ETF (XSLI)
When choosing a Swiss ETF, it is worth shopping around. All of the above funds and more will differentiate when it comes to the management company, the fees involved and the performance of the specific fund itself. Funds tracking the SMI would be an effective way of honing on Switzerland’s top dogs, but won’t offer the widespread diversification of the MSCI Switzerland.
Property & Real Estate Crowdfunding in Switzerland
The property market in Switzerland has been heating up ever since the tourist industry started to gain serious traction, but to the disappointment of international property seekers, any deal won’t be completed without a sea of red tape and stringent, multi-level regulations.
Foreigners aren’t able to buy property in many areas, but there is a way to be involved in the Swiss property market… through real estate crowdfunding.
This alternative investment provides access to a vast array of Swiss property projects, bypassing the heaps of paperwork and connecting investors with projects that can deliver a return on investment, often touting better interest rates than most banks.
The most alluring part? No eye-watering deposit is needed. Investors can get involved in Swiss projects from around £500-1000 on platforms like CreditGate24 and Foxstone, offering interest rates ranging from 3-8% and beyond. The country doesn’t have quite the range of platforms as its European neighbours, but still offers 8 Swiss real estate crowdfunding options, each with its own abundance of property projects.
Peer-to-Peer Lending In Switzerland
It’s equally easy to invest in debt notes and loans as it is to invest in property crowdfunding and even ETFs. The debt market is constantly growing as new business flourishes, and so are the number of sites offering P2P lending. There are currently 39 Swiss Peer-to-Peer Lending sites, with the number growing yearly. The diversity is already interesting, with sites like Swisspeers offering business loans, and platforms like Splendit specialising in tailored loans for educational goals. The foundations for P2P lending and crowdfunding are already there. As modern investors start to diverge away from traditional banking institutions, P2P Lending may begin to thrive in Switzerland.
The Big Picture
Switzerland is a bastion of financial strength and asset security. Its liberal tax stance and attractive banking institutions usher in new foreign investment on a daily basis. By investing in ETFs like the MSCI Switzerland or the SMI Index, investors benefit directly from the strong Swiss Franc and the strong performance of the country’s economy. The market for alternative investment is undoubtedly strong. With property investment more or less out of sight for foreigners, real estate crowdfunding platforms open the gates to a realm of accessible opportunity. The overall Peer-to-Peer lending space is growing year over year with offers for business debt, personal loans and even green loans.
- The World Bank: “GDP per Capita Switzerland (USD)”
- The Federal Department of Foreign Affairs Switzerland (DFAE): “Swiss Economy Facts & Figures”
- SIX Exchange: “Your Swiss Gateway to the World of Financial Markets”
- Swiss Bankers Association: “What Distinguishes the Financial Center”
- RiskConcern: “FTSE 100 vs. Swiss Market Index”
- SIFMA Insights: “Global Equity Markets Primer”